The Management of Five Square Corp

question 18

Multiple Choice

The management of Five Square Corp.wants to reduce the separation between ownership (by shareholders) and control of the firm (by professional managers) .Which of the following practices would best help the company do this?

• A) Allowing employees to purchase the stock of the company at a discounted rate
• B) Reinvesting the annual profits of the company into research and development
• C) Issuing new additional shares to the existing stockholders in proportion to their current holdings
• D) Declaring the annual profits as bonus dividends to the existing stockholders

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Definitions:

Warranty of Merchantability

A guarantee implied by law that a product sold will meet certain quality and performance standards.

Vet Bills

Expenses incurred for medical treatment, surgeries, medications, and general healthcare provided by veterinarians to animals.

Merchantable

Refers to goods being fit for the purpose for which they are sold, meeting the buyer's reasonable expectations.

Variation

A change or difference in condition, amount, or level, typically with certain limits.