Rachi Is a Wealthy Business Person with Substantial Personal Assets

question 34

Multiple Choice

Rachi is a wealthy business person with substantial personal assets.One of the businesses she carries on is a health club.She has carried on this business as a sole proprietorship,but she has decided to incorporate a corporation under the Canada Business Corporations Act to carry it on.She will be the sole shareholder and director.If you were a client of the health club,which of the following would be a legitimate concern based on the change in the legal status of the health club business?

• A)Management personnel will change.
• B)Standards for cleanliness and service quality will decline.
• C)Prices for annual memberships will go up.
• D)The risk that any claim you might have against the business will not be paid will likely increase.
• E)It will be no use to you to complain to Rachi about any problems you have with the operation of the health club.

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Definitions:

Creditors

Creditors are individuals or institutions to whom money is owed by another individual or entity, typically resulting from a loan or credit extended.

Debtors

Individuals or entities that owe money to another party, typically as a result of borrowing funds.

Nominal Rate

The interest rate as stated without adjusting for inflation, representing the actual percentage that borrowers pay and lenders receive.

Real Rate

The interest rate adjusted for inflation, reflecting the true cost of borrowing or the true return on investment.