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:

Uneconomical Lot-Sizes

Lot-sizes that do not maximize efficiency or cost-effectiveness in production or ordering.

Service Company

A business entity that provides intangible products or services to customers rather than physical goods.

Fixed And Variable Cost

Fixed and Variable Cost are two types of costs incurred by businesses; fixed costs do not change with the level of production or service, while variable costs vary directly with the level of production or service.

Planning Budget

A budget created at the beginning of the budgeting period that is valid only for the planned level of activity.