Caverun Co

question 79

Multiple Choice

Caverun Co. has two classes of stock. The company may:

• A) issue stock warrants, which are short-term options to buy shares.
• B) issue stock rights, which are long-term options to buy shares.
• C) not use stock options to make one class of stock more attractive than the other.
• D) use stock options and warrants, the form and content of which are determined by the board of directors, to supplement compensation plans for directors, officers, and employees.
• E) Both issue stock warrants, which are short-term options to buy shares  and also  issue stock rights, which are long-term options to buy shares.

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Definitions:

Total Assets

The sum of all resources owned by an entity, including both current and fixed assets, representing the total value of what it owns.

Liquidity

The ease with which assets can be converted into cash without significantly affecting their value, often essential for meeting short-term financial obligations.

Leverage

The use of borrowed capital or financial instruments to increase the potential return of an investment, or in business, the use of various techniques to maximize outcomes.

Ability to Generate Cash

The capacity of a business to convert activities or assets into liquid funds to meet short-term obligations and support operations.