Which of the Following Is an Advantage of Ownership of a Corporation

question 206

Multiple Choice

Which of the following is an advantage of ownership of a corporation compared to that of a sole proprietorship?

• A) The owners of the corporation have unlimited liability for the firm's debts.
• B) It is the simplest to start.
• C) The corporation has an unlimited life.
• D) Dividends received by the corporation's shareholders are tax-exempt.
• E) It is more difficult to transfer ownership in a corporation.

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Definitions:

Corporate Takeover

The acquisition of one company, called the target company, by another, referred to as the acquiring company, which effectively allows the acquiring company to make decisions for the target company.

Distribution

Payment made by a firm to its owners from sources other than current or accumulated earnings.

Going-Private Transaction

A corporate action in which a company's outstanding public shares are bought out, usually by a private investor, to delist it from public stock exchanges.

Reverse IPO

A process where a private company becomes publicly traded by acquiring a majority stake in a public company, bypassing traditional initial public offerings (IPO) processes.