The Three Noteworthy Features of Corporations' Legal Status Include All

question 136

Multiple Choice

The three noteworthy features of corporations' legal status include all of these except:

• A)they are taxed 
• B)special limits are placed on the losses that may be incurred by those who invest incorporations 
• C)the corporation is a distinct entity separate from its owners 
• D)they may invest in the stock market and acquire financing

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Definitions:

Funding Sources

Various origins of capital used to start or expand a business, including debt financing, equity financing, and internal funds.

Cost of Capital

The cost of capital is the rate of return a company must earn on its investments to maintain its market value and attract funds, including the cost of equity and debt.

Weighted Average Cost of Capital (WACC)

The average rate of return a company is expected to pay its security holders to finance its assets, weighted according to the proportion of equity and debt in the company's capital structure.

Cost of Equity Financing

This represents the return a company must offer investors to entice investment, effectively the cost of new equity capital.