In Accordance with the Rules That Apply to Corporate Formation

question 6

Multiple Choice

In accordance with the rules that apply to corporate formation, which one of the following features does not make an issue of preferred stock "nonqualified"?

• A)The shareholder can require the corporation to redeem the stock.
• B)The dividend rate on the stock may not vary with interest rates, commodity prices, or other similar indices.
• C)The corporation is either required to redeem the stock or is likely to exercise a right to redeem the stock.
• D)The stock is limited and preferred as to dividends.

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Definitions:

Deductive Reasoning

The reasoning that operates from generalities to specifics and can make relationships among data more apparent. Compare with inductive reasoning. See hypothetico-deductive approach.

Premises

Statements or ideas that serve as the basis for an argument or reasoning, often accepted as true to support the conclusion of an argument.

Conclusions

End statements in a document or presentation that summarize the main points or findings.

Control Group

A group in an experiment or study that does not receive treatment by the researchers and is used as a benchmark to measure how the other tested subjects do.