Which of the Following Statements Is CORRECT

question 22

Multiple Choice

Which of the following statements is CORRECT?

• A) In a typical partnership,liability for other partners' misdeeds is limited to the amount of a particular partner's investment in the business.
• B) In a limited partnership,the limited partners have voting control,while the general partner has operating control over the business,and the limited partners are individually responsible,on a pro rata basis,for the firm's debts in the event of bankruptcy.
• C) A slow-growth company,with little need for new capital,would be more likely to organize as a corporation than would a faster growing company.
• D) Partnerships have more difficulty attracting large amounts of capital than corporations because of such factors as unlimited liability,the need to reorganize when a partner dies,and the illiquidity (difficulty buying and selling)of partnership interests.
• E) A major disadvantage of a partnership relative to a corporation is the fact that federal income taxes must be paid by the partners rather than by the firm itself.

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Definitions:

Institutional Investors

Large organizations, such as pension funds, insurance companies, and mutual funds, that invest substantial amounts of money in securities and assets, often on behalf of others.

Initial Public Offerings (IPOs)

The method where a privately-held company offers its stock to the broader public for the initial time.

SUPERDOT

A now obsolete electronic system used by the New York Stock Exchange for routing orders directly to the trading floor, replacing manual order handling.

Specialist

A financial expert who possesses a deep understanding of specific securities or sectors, often responsible for facilitating trades by matching buyers with sellers.