If a Company Offers More Than One Class of Stock

question 26

Multiple Choice

If a company offers more than one class of stock, corporate governance experts feel that:

• A)that this is more democratic since some shares are more expensive than others.
• B)that this is preferable in order to provide a special class of nonvoting stock to executives.
• C)super-voting power allows for the election of directors that benefit a specific class of stock.
• D)decisions made by the dual class system is more advantageous for the average investor.

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Definitions:

Preexisting Duty Rule

A legal principle stating that an existing obligation in a contract cannot serve as consideration for a new contract or for modifying the existing contract.

Unforeseen Circumstances

Events or situations that could not have been predicted or expected and may affect the ability to fulfill obligations.

Liquidated Debt

A debt with a known, fixed amount that is not disputed by either party.

Unliquidated Debt

A debt for which the exact monetary value has not been determined.