Equity contracts quizlet

A voidable contract is a formal agreement between two parties that may be rendered unenforceable for a number of legal reasons. Reasons that can make a contract voidable include the following: Failure by one or both parties to disclose a material fact A mistake, misrepresentation or fraud. A quasi contract is also known as an implied contract. It would be handed down ordering the defendant to pay restitution to the plaintiff. The restitution, known in Latin as quantum meruit, or amount earned, is calculated according to the amount or extent to which the defendant was unjustly enriched.

1) Equity contracts A) are claims to a share in the profits and assets of a business. 2) A problem for equity contracts is a particular type of ________ called the ________ problem. court orders one party to act, or refrain from acting, to complete the contract; rare in contracts Sandra accepts an out-of-court settlement in exchange for dropping a lawsuit. The settlement agreement is supported by consideration in the form of forbearance of a legal right. Equity contracts A) are claims to a share in the profits and assets of a business. B) have the advantage over debt contracts of a lower costly state verification. C) are used much more frequently to raise capital than are debt contracts. D) are not subject to the moral hazard problem Debt contract - to solve principal agent problem/moral hazard in equity contracts. Is a contract agreement by the borrower to pay the lender a fixed dollar amounts at periodic intervals, and when profits are high they don't receive more and when low the company must give owner fair share and verify their profits. Moral hazard in equity contracts is known as the _____ problem because the manager of the firm has fewer incentives to maximize profits than the stockholders might ideally prefer principal-agent A venture capital firm protects its equity investment from moral hazard through what means? A) equity contracts are used much more frequently to raise capital than are debt contracts. B) monitoring managers gives rise to costly state verification. C) government regulations, such as standard accounting principles, can help reduce moral hazard. D) all of the above are true. E) only B and C of the above are true.

1) Equity contracts A) are claims to a share in the profits and assets of a business. 2) A problem for equity contracts is a particular type of ________ called the ________ problem.

The parties to an investment contract can be individuals, partnership firms, companies, government or the general public. Similar to any other contract, an investment contract also states the name and addresses of the parties to the contract who are accepting to make investments in the business venture. Equity theory is based on a principle that peoples' actions and motivations are guided by fairness and that discrepancies in this fairness in the workplace will spur them to try and redress it. According to Carrell and Dittrich (1978), “employees who perceive inequity will seek to reduce it, are often contained in contracts concerning the sale of an ongoing business. Ordinarily, a court does not look at the fairness or equity of a contract; in other words, it does not inquire into the adequacy of consideration. In certain circumstances, bargains are so oppressive that the courts relieve innocent parties of part or all of their A voidable contract is a formal agreement between two parties that may be rendered unenforceable for a number of legal reasons. Reasons that can make a contract voidable include the following: Failure by one or both parties to disclose a material fact A mistake, misrepresentation or fraud. A quasi contract is also known as an implied contract. It would be handed down ordering the defendant to pay restitution to the plaintiff. The restitution, known in Latin as quantum meruit, or amount earned, is calculated according to the amount or extent to which the defendant was unjustly enriched. Equity financing is the process of raising capital through the sale of shares in an enterprise. Equity financing essentially refers to the sale of an ownership interest to raise funds for business

A) equity contracts are used much more frequently to raise capital than are debt contracts. B) monitoring managers gives rise to costly state verification. C) government regulations, such as standard accounting principles, can help reduce moral hazard. D) all of the above are true. E) only B and C of the above are true.

A) equity contracts are used much more frequently to raise capital than are debt contracts. B) monitoring managers gives rise to costly state verification. C) government regulations, such as standard accounting principles, can help reduce moral hazard. D) all of the above are true. E) only B and C of the above are true. A) costly state verification makes the equity contract less desirable than the debt contract. B) of the reduced scope for moral hazard problems under equity contracts, as compared to debt contracts. C) equity contracts do not permit borrowing firms to raise additional funds by issuing debt.

Spencer J. Maxcy outlines the concept as follows: Imagine that you have set for yourself the task of developing a totally new social contract for today's society. How 

Equity theory is based on a principle that peoples' actions and motivations are guided by fairness and that discrepancies in this fairness in the workplace will spur them to try and redress it. According to Carrell and Dittrich (1978), “employees who perceive inequity will seek to reduce it, are often contained in contracts concerning the sale of an ongoing business. Ordinarily, a court does not look at the fairness or equity of a contract; in other words, it does not inquire into the adequacy of consideration. In certain circumstances, bargains are so oppressive that the courts relieve innocent parties of part or all of their A voidable contract is a formal agreement between two parties that may be rendered unenforceable for a number of legal reasons. Reasons that can make a contract voidable include the following: Failure by one or both parties to disclose a material fact A mistake, misrepresentation or fraud. A quasi contract is also known as an implied contract. It would be handed down ordering the defendant to pay restitution to the plaintiff. The restitution, known in Latin as quantum meruit, or amount earned, is calculated according to the amount or extent to which the defendant was unjustly enriched.

Equity contracts A) are claims to a share in the profits and assets of a business. B) have the advantage over debt contracts of a lower costly state verification. C) are used much more frequently to raise capital than are debt contracts. D) are not subject to the moral hazard problem

Equity financing is the process of raising capital through the sale of shares in an enterprise. Equity financing essentially refers to the sale of an ownership interest to raise funds for business

The parties to an investment contract can be individuals, partnership firms, companies, government or the general public. Similar to any other contract, an investment contract also states the name and addresses of the parties to the contract who are accepting to make investments in the business venture. Equity theory is based on a principle that peoples' actions and motivations are guided by fairness and that discrepancies in this fairness in the workplace will spur them to try and redress it. According to Carrell and Dittrich (1978), “employees who perceive inequity will seek to reduce it, are often contained in contracts concerning the sale of an ongoing business. Ordinarily, a court does not look at the fairness or equity of a contract; in other words, it does not inquire into the adequacy of consideration. In certain circumstances, bargains are so oppressive that the courts relieve innocent parties of part or all of their A voidable contract is a formal agreement between two parties that may be rendered unenforceable for a number of legal reasons. Reasons that can make a contract voidable include the following: Failure by one or both parties to disclose a material fact A mistake, misrepresentation or fraud. A quasi contract is also known as an implied contract. It would be handed down ordering the defendant to pay restitution to the plaintiff. The restitution, known in Latin as quantum meruit, or amount earned, is calculated according to the amount or extent to which the defendant was unjustly enriched.