Most Founders' Agreements Include a ________, Which Legally Obligates the Departing

question 4

Multiple Choice

Most founders' agreements include a ________, which legally obligates the departing founder to sell to the remaining founders his or her interest in the firm if the remaining founders are interested.

• A) redemption clause
• B) buyback clause
• C) statutory purchase clause
• D) voluntary recoup clause
• E) shareholder surrender clause

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Definitions:

Double Digit Yields

Interest or dividend rates that are in the double digits percentage-wise, indicating high returns on investment but typically with higher risk.

Single Digit Returns

Single digit returns refer to the percentage gain or loss on an investment that is less than ten percent, indicating a low to moderate performance.

Liquidity

The ability of an asset to be quickly converted into cash without significantly affecting its price.

Default Risk

The possibility that a borrower will fail to meet the obligations of a loan agreement.