The Control Rights of the Shareholders of a Firm Lie

question 13

Multiple Choice

The control rights of the shareholders of a firm lie in

• A)their ability to elect some members to the board of directors.
• B)their ability to sell their shares if they are unhappy.
• C)their ability to fire managers at will.
• D)their ability to force the firm into bankruptcy for non-payment of dividends.

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Definitions:

Tax Rate

The percentage at which an individual or corporation is taxed on their income or profits.

Market Value

The existing market price for buying or selling an asset or service.

Accounting Profit

Net income as reported on the financial statements, which includes revenue minus expenses, excluding the cost of capital.

Depreciated Value

The reduced valuation of an asset after accounting for wear and tear, age, or obsolescence.