Chapter 9 Stocks and Their Valuation • Common Stock: 1. One to one voting system 2. Residual – left over 3. The maximum amount someone can lose in stock is the amount of the stock I. Control of the Firm: • Proxy – is a document giving one person the authority to act for another, typically the power to vote shares of common stock • Proxy Flight – an attempt by a person or group to gain control of a firm by getting its stockholders to grant that person or group the authority to vote its shares to replace the current management • Takeover – is an action whereby a person or group succeeds in ousting a firm’s management and taking control of the company • Preemptive Right – is a provision in the corporate charter or bylaws that gives common stockholders the right to purchase on a pro rate basis new issues of common stock II. Types of Common Stock: 1. Classified Stock – is common stock that is given a special designation such as Class A or Class B to meet special needs of the company
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