Which of the Following Statements Is CORRECTσ

question 25

Multiple Choice

Which of the following statements is CORRECTσ

• A) corporations generally are subject to more favorable tax treatment and fewer regulations than partnerships and sole proprietorships, which is why corporations do most of the business in the united states.
• B) managers who face the threat of hostile takeovers are less likely to pursue policies that maximize shareholder value than are managers who do not face the threat of hostile takeovers.
• C) one advantage of the corporate form of organization is that liability of the owners of the firm is limited to their investment in the firm.
• D) because of their simplified organization, it is easier for sole proprietorships and partnerships to raise large amounts of outside capital than it is for corporations.
• E) bond covenants are an effective way to resolve conflicts between shareholders and managers.

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Definitions:

Ratification Agency

The process by which a principal approves and accepts the acts of their agent that were done without proper authority or beyond the scope of their authority.

Implied Authority

Power not explicitly granted to an agent but necessary to carry out the agent's duties effectively.

Expressed Agency

A legal relationship where an agent is explicitly granted the authority by the principal to act on their behalf.

Apparent Agency

The legal doctrine that allows a third party to hold a principal liable for the acts of an agent, where the principal has given the appearance of agency.