CHAPTER 8 QUESTION 1 (6 pts)

1) Larry Nelson holds 1,000 shares of General Electric common stock. The annual shareholders meeting is being held soon, but as a minor shareholder, Larry doesnt plan to attend. Larry did not sell his shares but gave his voting rights to the management group running 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. Currently, the companys stock is valued at $45.00 per share. The company needs to raise new capital to invest in its future production activities. The company is anticipating issuing 5,000 new shares at a price of $36.00 per share. Larry worries about the value of his investment.

2) Larrys current investment in the company is worth ___________

3) If the company issues its new shares and Larry makes no additional investments in the company, then his investment will be worth ___________

4) This scenario is an example of ___________

5) Larry could be protected if the firms corporate charter includes a _______________ provision.

6) If Larry exercises the provisions in the corporate charter to protect his stake, his investment value in the firm will become ______________