Bus Corporation Exchanges Some of Its Shares for Some of the Shares

question 56

Multiple Choice

Bus Corporation exchanges some of its shares for some of the shares of Car Company. The exchange is used to create Drive Inc., whose business activity is to hold the shares of the two companies. Once the formalities are satisfied, a certificate of the exchange is issued by

• A)Drive Inc.
• B)none of the choices.
• C)the appropriate state.
• D)the U.S. Department of Commerce.

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Definitions:

Zero Sum Game

A situation in finance or economics where each participant's gain or loss is exactly balanced by the losses or gains of the other participants.

American Call Option

An option contract that gives the holder the right, but not the obligation, to buy an underlying asset at a specified price within a set period, anytime until the contract's expiration.

Agreed Upon Quantity

This is the quantity of goods that the buyer and seller have mutually agreed upon for a transaction.

Expiration Date

The specific day on which an option contract or other derivative expires and can no longer be exercised.