Larry Nelson holds 1,000 shares of General Electric's (GE) common stock. The annual stockholder meeting is being held soon, but as a minor shareholder, Larry doesn't plan to attend. Larry did not sell his shares but gave his voting rights to the management group running General Electric (GE). Larry must have signed a that gives the management group control over his shares. Larry also holds 2,000 shares of common stock in a company that only has 20,000 shares outstanding. The company's stock currently is valued at $43.00 per share. The company needs to raise new capital to invest in production. The company is looking to issue 5,000 new shares at a price of $34.40 per share. Larry worries about the value of his investment. Larry's current investment in the company is If the company issues new shares and Larry makes no additional purchase, Larry's investment will be worth . Larry could be protected if the firm's corporate charter includes a This scenario is an example of provision. If Larry exercises the provisions in the corporate charter to protect his stake, his investment value in the firm will become
Larry Nelson holds 1,000 shares of General Electric's (GE) common stock. The annual stockholder meeting is being held soon, but as a minor shareholder, Larry doesn't plan to attend. Larry did not sell his shares but gave his voting rights to the management group running General Electric (GE). Larry must have signed a that gives the management group control over his shares. Larry also holds 2,000 shares of common stock in a company that only has 20,000 shares outstanding. The company's stock currently is valued at $43.00 per share. The company needs to raise new capital to invest in production. The company is looking to issue 5,000 new shares at a price of $34.40 per share. Larry worries about the value of his investment. Larry's current investment in the company is If the company issues new shares and Larry makes no additional purchase, Larry's investment will be worth . Larry could be protected if the firm's corporate charter includes a This scenario is an example of provision. If Larry exercises the provisions in the corporate charter to protect his stake, his investment value in the firm will become
Chapter19: Corporations: Distributions Not In Complete Liquidation
Section: Chapter Questions
Problem 51P
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Transcribed Image Text:Larry Nelson holds 1,000 shares of General Electric's (GE) common stock. The annual stockholder meeting is being
held soon, but as a minor shareholder, Larry doesn't plan to attend. Larry did not sell his shares but gave his voting
rights to the management group running General Electric (GE). Larry must have signed a
that
gives the management group control over his shares.
Larry also holds 2,000 shares of common stock in a company that only has 20,000 shares outstanding. The
company's stock currently is valued at $43.00 per share. The company needs to raise new capital to invest in
production. The company is looking to issue 5,000 new shares at a price of $34.40 per share. Larry worries about the
value of his investment.
Larry's current investment in the company is
If the company issues new shares and Larry makes no
additional purchase, Larry's investment will be worth
. Larry could be protected if the firm's corporate charter includes a
This scenario is an example of
provision.
If Larry exercises the provisions in the corporate charter to protect his stake, his investment value in the firm will
become
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