A corporate charter specifies that the company may sell up to 20 million shares of stock.The company sells 12 million shares to investors and later buys back 3 million shares.Of the 3 million shares bought back,the company cancels 2 million and holds 1 million.The number of authorized shares after these transactions are:
A)12 million shares.
B)20 million shares.
C)9 million shares.
D)18 million shares.

Question

Quizplus · Accepted Answer

The corporate charter specifies that the company may sell up to 20 million shares. The company initially sells 12 million shares, which leaves 8 million authorized shares remaining. When the company buys back 3 million shares, the total number of authorized shares is still 20 million. However, the company cancels 2 million shares, which means that only 1 million shares are held. Therefore, the number of authorized shares after these transactions is still 20 million.

A Corporate Charter Specifies That the Company May Sell Up