A Freeze-Out

question 47

Multiple Choice

A freeze-out:

• A)occurs when a majority shareholder is "frozen out" by the management regarding such issues as a reduction or elimination of dividends.
• B)can be easily reversed in court.
• C)results in the minority shareholder having little influence in important corporate issues such as loss of employment.
• D)occurs mostly in S Corporations.

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Definitions:

Perpetuity

A financial term referring to a type of annuity that pays a series of payments indefinitely, with no end.

10-Year Bond

A financial instrument issued by governments or corporations promising to pay back borrowed funds with interest over a ten-year period.

Perpetuities

Financial instruments or investments that provide a never-ending stream of cash flows with no expiration date.

Market Price

The current price at which an asset or service can be bought or sold.