Which of the Following Is True with Regard to the Characteristics

question 10

Multiple Choice

Which of the following is true with regard to the characteristics of corporations?

• A) The corporation is a separate legal person, but neither can sue nor be sued.
• B) Shareholders, are liable for the debts and other obligations of the corporation.
• C) Directors are responsible for the shareholders of the corporation.
• D) A shareholder's liability is limited to the amount he or she paid for the shares.
• E) The shareholders would be vicariously liable for any damage caused by a employee of the corporation carrying out his or her duties.

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Definitions:

Risk Premium

Maximum amount of money that a risk-averse individual will pay to avoid taking a risk.

Expected Return

The predicted average of possible returns for an investment, accounting for the probability of each outcome and its associated return.

Risk-Adjusted Discount Rate

A discount rate that adjusts for the risk of the cash flows, giving a more accurate present value estimate.

Market Return

The total return on investment, including dividends and capital gains, from holding a market portfolio.