Which of the Following Is an Advantage of a C

question 54

Multiple Choice

Which of the following is an advantage of a C Corporation?

• A) Setting up and maintaining one is more difficult than for a sole proprietorship or a partnership.
• B) Stock is liquid if traded on a major stock exchange.
• C) Business losses cannot be deducted against the shareholders' other sources of income.
• D) Income is subject to double taxation.
• E) Small shareholders typically have little voice in the management of the firm.

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Definitions:

Creditors

People or organizations that provide loans or credit to others with the anticipation of receiving payment back later on.

NPVGO

Net Present Value of Growth Opportunities; a valuation method that calculates the present value of investment opportunities a company is expected to undertake in the future.

Above Average P/E Multiple

A valuation metric indicating that a company's current share price is higher relative to its per-share earnings than the industry or overall market average.

Risk-adjusted Equity Cost

A method of determining the cost of equity capital that incorporates the risk associated with the equity investment.