A Contract with a Residual Interest in the Assets of an Entity

question 30

Multiple Choice

A contract with a residual interest in the assets of an entity after deducting all of its liabilities is referred to as a (an) :

• A) equity instrument.
• B) derivative instrument.
• C) primary instrument.
• D) secondary instrument.

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Definitions:

Limited Liability Company

A flexible form of business enterprise that blends elements of partnership and corporate structures, offering personal liability protection to its owners.

Nonprofit Corporation

A legal entity organized for a collective purpose, such as charitable, educational, cultural, or social welfare, without intent for profit distribution to its members or directors.

Merger Approval

The official sanction by regulatory authorities allowing two or more companies to consolidate into one entity.

Cash-Out Combinations

Financial strategies or transactions where owners of a business sell their stake in the company, partially or entirely, for cash.