Sam, Alfredo, and Juan Want to Start a Small U

question 22

Multiple Choice

Sam, Alfredo, and Juan want to start a small U.S. business. Juan will fund the venture but wants to limit his liability to his initial investment and has no interest in the daily operations. Sam will contribute his full efforts on a daily basis but has limited funds to invest in the business. Alfredo will be involved as an active consultant and manager and will also contribute funds. Sam and Alfredo are willing to accept liability for the firm's debts as they feel they have nothing to lose by doing so. All three individuals will share in the firm's profits and wish to keep the initial organizational costs of the business to a minimum. Which form of business entity should these individuals adopt?

• A) Sole proprietorship
• B) Joint stock company
• C) Limited partnership
• D) General partnership
• E) Corporation

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Definitions:

Fake Cigarettes

Products designed to mimic the appearance and sometimes the sensation of smoking tobacco, often used as aids to quit smoking.

Placebo

An inert substance or treatment with no therapeutic value, used in the control group of an experiment.

Antianxiety Drug

Medication prescribed to relieve anxiety symptoms, often by affecting neurotransmitter levels in the brain, including benzodiazepines and SSRIs.

Randomly Assigned

A method used in experiments where participants are allocated to different groups in a way that is determined entirely by chance.