The Prudent Man Law Requires _________

question 90

Multiple Choice

The prudent man law requires _________.

• A) executives of companies to avoid investing in options of companies by which they are employed
• B) executives of companies to disclose their transactions in stocks of companies by which they are employed
• C) professional investors who manage money for others to avoid all risky investments
• D) professional investors who manage money for others to constrain their investments to those that would have been approved by the prudent investor
• E) none of these

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Definitions:

Paid-In Capital

The sum of funds contributed by investors through the issuance of common or preferred shares, encompassing the nominal value of the stocks plus any additional amounts paid over this value.

Treasury Stock

Refers to shares that were once part of the outstanding shares, but were bought back by the company and are being held in the company's treasury.

Common Stockholders

Individuals or entities that own shares in a corporation, granting them rights to dividends and a vote in certain corporate matters.

Rights Granted

Rights Granted refers to permissions or privileges given to an individual or entity, which allows them certain freedoms or abilities under specific conditions.