Which of the Following Statements Is CORRECT

question 39

Multiple Choice

Which of the following statements is CORRECT?

• A) One disadvantage of organizing a business as a corporation rather than a partnership is that the equity investors in a corporation are exposed to unlimited liability.
• B) Using restrictive covenants in debt agreements is an effective way to reduce conflicts between stockholders and managers.
• C) Managers generally welcome hostile takeovers since the "raider" generally offers a price for the stock that is higher than the price before the takeover action started.
• D) The managers of established, stable companies sometimes attempt to get their state legislatures to impose rules that make it more difficult for raiders to succeed with hostile takeovers.
• E) The managers of established, stable companies sometimes attempt to get their state legislatures to remove rules that make it more difficult for raiders to succeed with hostile takeovers.

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Definitions:

Stock Option Plan

A compensation scheme in which employees are given the option to purchase company stock at a discounted price, intended to align their interests with those of the company's shareholders.

Employee Turnover

The rate at which employees leave a company and are replaced by new employees, indicating the stability and retention capacity of a workplace.

Measurement Date

The specific point in time at which the value of an asset or liability is determined for accounting purposes.

Intrinsic Value Method

A valuation technique which determines the underlying worth of an asset based on its perceived or calculated true value, rather than its current market price or book value.