Which Form of Business Structure Faces the Greatest Agency Problems

question 119

Multiple Choice

Which form of business structure faces the greatest agency problems?

• A) Sole proprietorship.
• B) General partnership.
• C) Limited partnership.
• D) Corporation.
• E) Limited liability company.

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Definitions:

Staggered Maturity Dates

A strategy involving financial instruments or liabilities that have various maturity dates spread out over time to reduce risk and improve liquidity.

Coupon Bond

A debt security that pays the bondholder a fixed interest rate (coupon) periodically until the bond's maturity date, at which point the principal amount is repaid.

Yield To Maturity

The total return anticipated on a bond if the bond is held until it matures, considering both interest payments and the principal appreciation or depreciation.

Par Value

The face value of a bond or stock, as stated by the issuing company. This is the nominal value and may differ from the market value.