If a Shareholder Supplies Needed Material to the Business Then

question 360

Multiple Choice

If a shareholder supplies needed material to the business then he:

• A) will become a creditor of the corporation and will enjoy the same rights of recovery against the corporation as any other creditor
• B) will not officially become a creditor of the corporation, but will enjoy the same rights of recovery against the corporation as any other creditor
• C) will be removed from the corporation
• D) will be forced to sell his shares in the company
• E) will become a creditor of the corporation, but will not enjoy the same rights of recovery against the corporation as any other creditor

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Definitions:

Expected Inflation

The anticipated rate at which the general level of prices for goods and services will rise over a period.

Expectations Theory

A theory that explains the term structure of interest rates based on the anticipation that the rates will move toward the average rate over the long term.

Yield Curve

A graph showing the relationship between bond yields and their maturities, often used to predict changes in economic output and interest rates.

Risk Premiums

Additional returns expected by investors for taking on additional risk compared to a risk-free investment.