Which of the Following Statements Is Correct

question 15

Multiple Choice

Which of the following statements is correct?

• A)Other things held constant, it is generally safer to invest money in a proprietorship than in a corporation.
• B)There really is no difference between a general partnership and a corporation, because both have multiple owners and both offer limited liability to the owners.
• C)If you are planning to start a business, which you will run as the sole employee, and if you expect the business to earn $1,000,000 per year before taxes, you always can minimize the total taxes you pay by setting up the business as a corporation.
• D)According to the text, "agency problems" tend to increase when managers own larger relative amounts of the company's stock.
• E)Maximizing the income statement item "net income" might not be the best goal for a corporation if the managers are interested in maximizing the economic welfare of the firm's stockholders (that is, the firm's stock price).

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Definitions:

Pollution Credits

Tradable permits under regulatory systems designed to control and reduce pollution by giving companies a specific allowance for emissions; companies can buy or sell these allowances to meet environmental regulations.

Biodiesel

A renewable, biodegradable fuel made from vegetable oils, animal fats, or recycled restaurant greases for use in diesel engines.

Oil Prices

The cost per barrel of crude oil, influenced by global supply and demand, geopolitical events, and market speculation.

Energy Efficiency

Refers to using less energy to provide the same service or achieve the same level of function.