The Third State Bank of Denton Has Decided to Issue

question 25

Multiple Choice

The Third State Bank of Denton has decided to issue stock through a trust company and borrow the funds from the trust company.This stock pays a fixed dividend and because of the way the stock has been issued it is tax deductible.What way of meeting their capital needs in the bank taking?

• A)Issuing common stock
• B)Issuing preferred stock
• C)Issuing subordinated notes and debentures
• D)Selling assets and leasing facilities
• E)Swapping stock for debt instruments

---

Definitions:

Vicarious Liability

Holding one person or entity legally responsible for the actions of another, typically an employee or agent.

Principal-Agent Relationship

A relationship in which one party (the agent) is authorized to act on behalf of another (the principal) in conducting transactions with third parties.

Strict Liability

A legal principle where a party is responsible for damages caused by their actions, regardless of negligence or intent.

Voting Agreement

A legal pact among shareholders to vote their shares in a certain manner.