Which Form of Business Structure Faces the Greatest Agency Problems

question 36

Multiple Choice

Which form of business structure faces the greatest agency problems?

• A) sole proprietorship
• B) general partnership
• C) limited partnership
• D) corporation
• E) limited liability company

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Definitions:

Cumulative Preferred Stock

A type of preferred stock where dividends accumulate if not paid in a given year, requiring payment of missed dividends before common shareholders can receive dividends.

Common Stock

Equity securities that represent ownership in a company, usually accompanied by voting rights and potential for dividends.

Dividends

Money distributed from a company's profits to its owners or investors.

Stock Dividend

A dividend payment made in the form of additional shares rather than cash, often used by companies to conserve cash.