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:

Earnings

The amount of money that an individual or corporation receives in exchange for providing a good, service, or through investing capital.

Salaried Manager

An employee who receives a fixed amount of remuneration from their employer at regular intervals, typically monthly or annually, and often occupies a supervisory or managerial position.

Industrious Franchisee

A franchisee who demonstrates exceptional dedication and work ethic in managing and growing their franchised business.

Franchised Restaurant

A restaurant that operates under the branding and operational guidelines of a larger chain, typically through a licensing agreement.