If a Shareholder Works for the Business Then He

question 397

Multiple Choice

If a shareholder works for 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:

Risk-neutral

A characteristic of individuals or entities that exhibit indifference between choices with differing levels of risk, focusing solely on expected outcomes.

Expected Utility

A strategy in economics and game theory where individuals choose the option with the highest expected benefit, taking into account all future outcomes.

Risk-neutral

Refers to a mindset or condition where an individual or entity is indifferent to risk when making investment decisions, focusing instead on the potential returns without giving additional weight to the possibility of loss.

Expected Utility

a theory in economics that quantifies how choices are made when outcomes are uncertain, aiming to maximize the expected utility rather than merely the expected monetary value.