One Disadvantage of a Limited Liability Company Is That It

question 25

Multiple Choice

One disadvantage of a limited liability company is that it:

• A)Requires all earnings of the business be taxed at the corporate rate.
• B)Has a limited life span.
• C)Requires the owners to divide up profits and losses in a fixed proportion.
• D)Has a more restrictive ownership requirement than S corporations.

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Definitions:

Put Option

An option contract giving the holder the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specified time.

Time to Expiration

The duration remaining until the expiration date of a derivative contract, such as an option or futures contract, which represents the time period within which the contract can be executed.

Intrinsic Value

The actual, fundamental worth of an asset or investment, determined through financial analysis independent of current market value.

Time Value

The concept that money available now is worth more than an identical sum in the future due to its potential earning capacity.