Which of the Following Statements Is Correct

question 17

Multiple Choice

Which of the following statements is correct?

• A) A hostile takeover is a primary method of transferring ownership interest in a corporation.
• B) The corporation is a legal entity created by the state and is a direct extension of the legal status of its owners and managers,that is,the owners and managers are the corporation.
• C) Unlimited liability and limited life are two key advantages of the corporate form over other forms of business organization.
• D) In part due to limited liability and ease of ownership transfer,corporations have less trouble raising money in financial markets than other organizational forms.
• E) Although stockholders of the corporation are insulated by limited legal liability,the legal status of the corporation does not protect the firm's managers in the same way.

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Definitions:

Market Rate

The prevailing interest rate available in the marketplace for securities, loans, and deposits.

Coupon Rate

The interest rate on a bond, representing the annual interest payment made by the bond issuer relative to the bond's face value.

Amortization

The gradual reduction of a debt or the spreading out of the cost of an intangible asset over its useful life.

Discount

A reduction from the usual cost of something, often applied to encourage sales or offered to certain groups.