Caverun Co.has Two Classes of Stock.The Company May

question 11

Multiple Choice

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

• A) issue stock rights, which are long-term options to buy shares.
• B) issue stock warrants, which are short-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:

Required Reserves

are the minimum amounts of funds that banks must hold in reserve against deposits, as mandated by central banks.

Federal Funds Target Rate

The interest rate at which banks and credit unions lend reserve balances to other depository institutions overnight, guided by the Federal Reserve.

Depository Institutions Deregulation

The process of removing or easing government regulations on banks and other depository institutions to enhance efficiency and competitiveness.

Money Creation

The process by which the money supply of a country is increased through activities primarily conducted by its central bank.