The Maximum Amount of Money That Company Shareholders Can Lose

question 9

Multiple Choice

The maximum amount of money that company shareholders can lose on their investment in the corporation is

• A) whatever percentage of their wealth equals their percentage of ownership.
• B) whatever they paid for the shares in the company.
• C) whatever the corporation loses each year times the percentage of ownership in the company.
• D) zero.

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Definitions:

Stock Options

These are contracts that give the holder the right to buy or sell shares of a stock at a predetermined price within a specific time period.

Option Holders

Individuals or entities that possess the rights to execute the purchase or sale of a specific asset at a specified price before the option expires.

Stock Ownership Plans

Employee benefit plans that provide workers with an ownership interest in the company through stock ownership, often aimed at improving employee motivation and loyalty.

Human Resource Management

The strategic approach to the effective management of people in a company or organization to help their business gain a competitive advantage, including hiring, training, and employee benefit design.