Most Partnerships Have Difficulty Attracting Substantial Amounts of Capital

question 390

Multiple Choice

Most partnerships have difficulty attracting substantial amounts of capital. This is generally not a problem for a slow growing business. But if a business's products or services really catch on, the difficulty in attracting capital becomes a real drawback. For these reasons, many growth companies, which begin life as a proprietorship or partnership, at some point find it necessary to convert to a corporation. Eugene F. Brigham, Financial Management: Theory and Practice

• A) Argument; conclusion: This is generally not a problem ... business.
• B) Nonargument.
• C) Argument; conclusion: But if a business's products ... becomes a real drawback.
• D) Argument; conclusion: Many growth companies ... to convert to a corporation.
• E) Argument; conclusion: Most partnerships have difficulty ... amounts of capital.

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Definitions:

False Uniqueness

The erroneous belief that one's abilities, thoughts, or characteristics are more unique or exceptional than they actually are, often underestimating commonality with others.

External Attribution

The process of assigning the cause of one's own or others' behaviors to external factors or circumstances beyond the individual's control.

Illusory Correlation

The phenomenon of perceiving a relationship between variables (typically people, events, or behaviors) even when no such relationship exists.

False Uniqueness Effect

Refers to an individual's tendency to underestimate the commonality of one's abilities and one's desirable or successful behaviors.