Which of the Following Statements Is CORRECT

question 39

Multiple Choice

Which of the following statements is CORRECT?

• A) The main method of transferring ownership interest in a corporation is by means of a hostile takeover.
• B) Two key advantages of the corporate form over other forms of business organization are unlimited liability and limited life.
• C) A corporation is a legal entity that is generally created by a state; its life and existence is separate from the lives of its individual owners and managers.
• D) Limited liability of its stockholders is an advantage of the corporate form of organization, but corporations have more trouble raising money in financial markets because of the complexity of this form of organization.
• E) Although its stockholders are insulated by limited legal liability, the corporation's legal status does not protect the firm's managers in the same way; i.e., bondholders can sue its managers if the firm defaults on its debt, even if the default is the result of poor economic conditions.

---

Definitions:

Tax Base

The total amount of assets or income that can be taxed by a government, providing a source of revenue.

Marginal Tax Rate

The percentage at which the last dollar of income is taxed, indicating how much tax will be paid on an additional dollar of income.

Total Income

The sum of all earnings or revenue generated by an individual or organization before any deductions.