When Property Rights Are Clearly Defined and Enforced, Private Owners

question 19

Multiple Choice

When property rights are clearly defined and enforced, private owners will

• A) use their property for selfish ends because they have little or no incentive to consider the desires of others.
• B) develop and direct their property toward uses that others value highly because the market will generally reward them for doing so.
• C) have little or no incentive to take care of their property or conserve it for the future.
• D) be unable to derive personal gain if they are sensitive to the desires of others when deciding how to use their property.

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Definitions:

Warrant Attached

An option issued by a company that gives the holder the right to purchase the company’s stock at a specific price before expiration.

Ex-rights

Denotes a security that is trading without the right to receive the most recently announced rights offering.

Additional Paid-in Capital

The amount of money investors have paid to a company above and beyond the par value of the shares they have purchased.

Cumulative Preferred Stock

A type of preferred stock where dividends accumulate if not paid in any given year, ensuring that dividends must be paid out to preferred stockholders before common stockholders receive any.