The Disadvantages of Selling Stock to Obtain Long-Term Financing Include

question 345

Multiple Choice

The disadvantages of selling stock to obtain long-term financing include:

• A) the legal obligation to pay dividends if the company is profitable.
• B) the funds contributed by stockholders must be repaid from after-tax profits.
• C) a reduction in the market value of the firm's products.
• D) a possible change in management and policies in the company.

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Definitions:

Hypodescent

Refers to a societal rule that assigns a person with mixed ancestry to the social category of the subordinate or minority group rather than the dominant one.

Discriminate

To differentiate or make distinctions between individuals or groups often based on prejudice or unjust grounds such as race, sex, or age.

Caste System

A traditional form of social stratification characterized by hereditary transmission of lifestyle, occupation, and social status.

Slavery

A system in which individuals are owned by others, denied freedom, and forced to work without any form of compensation.