Which of the Following Statements Is CORRECT

question 7

Multiple Choice

Which of the following statements is CORRECT?

• A) Corporations generally are subject to more favorable tax treatment and fewer regulations than partnerships and sole proprietorships, which is why corporations do most of the business in the United States.
• B) Managers who face the threat of hostile takeovers are less likely to pursue policies that maximize shareholder value than are managers who do not face the threat of hostile takeovers.
• C) One advantage of the corporate form of organization is that liability of the owners of the firm is limited to their investment in the firm.
• D) Because of their simplified organization, it is easier for sole proprietorships and partnerships to raise large amounts of outside capital than it is for corporations.
• E) Bond covenants are an effective way to resolve conflicts between shareholders and managers.

Understand shareholder rights, including preemptive and dissenters' rights, under the Model Business Corporation Act.

Identify the processes and approvals required for corporate actions like mergers, share repurchases, and dissolution.

Recognize the implications and responsibilities related to dividend distributions, especially in the case of insolvency.

Understand the legal framework governing the obligations and rights of shareholders and directors in a merger situation.

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Definitions:

Somatic Symptom Disorder

A mental disorder in which a person has significant focus on physical symptoms, such as pain, that causes major emotional distress and problems functioning.

Illness Anxiety Disorders

A condition characterized by excessive worry about having or acquiring a serious illness, despite medical reassurance.

Conversion Disorders

Psychological conditions where emotional distress or unconscious conflict is expressed through physical symptoms, without a medical cause.

Korsakoff's Syndrome

A chronic memory disorder caused by severe deficiency of thiamine (vitamin B1), often associated with alcohol misuse, characterized by memory loss and fabrication of events.