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.
Options: Poison Pill, Proxy, Preemptive Right, Corporate Charter
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 $42.00 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 $33.60 per share. Larry worries about the value of his investment.
Larry's current investment in the company is_______ (a. $92,400, b. $84,000, c. $33,600, d. $50,400). If the company issues new shares and Larry makes no additional purchase, Larry's investment will be worth _________ (a. $201,600, b. $84,000, c. $120,960, d. $80,640).
This scenario is an example of _________ (a. a proxy, b. dilution, c. a takeover, d. a poison pill). Larry could be protected if the firm's corporate charter includes a ______________ (a. preemptive right, b. proxy) provision.
If Larry exercises the provision in the corporate charter to protect his stake, his investment value in the firm will become ____________ (a. $75,600, b. $101,800, c. 108,100, d. $151,200).