Sid Hosey, your uncle, is an inventor who has decided to incorporate. Uncle Sid knows that you are an accounting major at U.N.O. In a recent letter to you, he ends with the question, “I’m filling out a state incorporation application. Can you tell me the difference in the following terms:

(1) Authorized stock,

(2) Issued stock,

(3) Outstanding stock,

(4) Preferred stock ?”

Instructions

In a brief note, differentiate for Uncle Sid among the four different stock terms. Write the letter to be friendly, yet professional.