Which of the Following Statements Is CORRECT

question 19

Multiple Choice

Which of the following statements is CORRECT?

• A) One disadvantage of operating as a corporation rather than as a partnership is that corporate shareholders are exposed to more personal liability than partners.
• B) There is no good reason to expect a firm's bondholders and stockholders to react differently to the types of new asset investments a firm makes.
• C) Bondholders are generally more willing than stockholders to have managers invest in risky projects with high potential returns as opposed to safer projects with lower expected returns.
• D) Stockholders are generally more willing than bondholders to have managers invest in risky projects with high potential returns as opposed to safer projects with lower expected returns.
• E) Relative to sole proprietorships, corporations generally face fewer regulations, which makes raising capital easier for corporations.

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Definitions:

Account Category

A classification used in accounting to organize financial transactions, such as assets, liabilities, equity, revenue, and expenses.

Net Sales

The total revenue from sales transactions after deducting returns, allowances, and discounts.

Discount Period

A specified period within which a buyer can pay less than the full amount due by taking advantage of a discount offered by the seller.

Customer

An individual or entity that purchases goods or services from a business.