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:

Maslow's

Refers to Maslow's Hierarchy of Needs, a psychological theory that categorizes human needs into five levels from basic physiological needs to self-actualization, influencing motivation and behavior.

Progression Principle

The principle that a need isn’t activated until the previous lower-level need is satisfied.

Hierarchy Principle

A system or organization in which people or groups are ranked one above the other according to status or authority.

Deficit Principle

The principle that a satisfied need does not motivate behaviour.