The Ability to Share Work and Share Risk Is an Advantage

question 170

Multiple Choice

The ability to share work and share risk is an advantage for

• A)sole proprietorships and partnerships.
• B)sole proprietorships.
• C)sole proprietorships and corporations
• D)partnerships.

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Definitions:

Agency Costs

Expenses that arise from conflicts of interest between management of a company and its shareholders, including costs related to monitoring and aligning interests.

Underinvestment

Underinvestment occurs when a company or individual invests less than what is necessary to achieve optimal growth or returns.

Wasteful Spending

This refers to the unnecessary or excessive use of funds.

Corporate Valuation Model

Defines the total value of a company as the value of operations plus the value of nonoperating assets plus the value of growth options.