Smalltown Contracted with Construction Co

question 35

Multiple Choice

Smalltown contracted with Construction Co. (CC) to repave a street. CC was required to obtain a performance bond, which it did, from Bond Co. While the crew was paving, a distracted driver whizzed by the flagger and crashed into the paving machinery. All three CC employees were injured and hospitalized. Bond Co. performed to Smalltown, and now seeks compensation from the distracted driver. ___________.

• A) reimbursement
• B) contribution
• C) restitution
• D) subrogation
• E) exoneration

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Definitions:

Market Value

The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm's length transaction.

Paid-In Capital

Capital received from investors for stock, representing the funds that shareholders have invested in the company.

Par Value

The nominal or face value of a bond, share of stock, or other financial instrument.

Common Stock

Refers to shares that represent ownership in a corporation, providing voting rights and dividends, but with no fixed dividend rate.