Answer to Question #285748 in Economics of Enterprise for Charlton

Question

26. How can a technology entrepreneur use a vesting schedule to motivate employees?

27. What are the responsibilities of a corporation’s board of directors? How can a technology entrepreneur ensure compliance with statutes governing the corporate entity?

28. Explain the difference between common and preferred stock. What are some potential features that can be added to preferred stock offerings?

29. Explain what it means for a new technology venture to be “overcapitalized.” What are the disadvantages of this?

30. Identify the type of investor who is most likely to invest in pre-start-up technology ventures. Explain how the technology entrepreneur should approach and work with these investors.

Answer 1

$Solution$

26) since its an incentive program established by employers to employees to give right to ownership of certain assets it enables promote responsibility and accountability at the same time productivity of employees .it also promotes alignment of employees interest with that of shareholders.

27)the duties of the board.

Hire a manager, supervise, retain, evaluate and compensate him /her where necessary.

Assist with the organization's direction/provide directions.

Create a governance structure based on policies.

Managing the company in connection with the CEO.

Compliance can be achieved:By following company rules and regulations.

Following the companies act governing the sector.

28)The major distinction between preferred and common stock is that preferred stock does not provide shareholders voting rights, but common stock does.

Preferred shareholders receive dividends before common shareholders because they have priority over a company's income.

Additional point can be :When it comes to firm assets, common stockholders are last in line, which means they will be paid out after creditors, bondholders, and preferred shareholders.

29)Overcapitalization occurs when a company has more debt than its assets are worth.

One of the major disadvantange is that Ultimately, company that is overcapitalized may face bankruptcy.

30) some of the investors will be :venture capitalists.

Angel investors

The process to approach an investor is by ensuring or approaching them with the niche pitch,..know the numbers involved(financials) and do proper niche research.