quiz 1 finance - Which of the following statements is...

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Which of the following statements is CORRECT? A)  Corporate shareholders are exposed to unlimited liability, but this factor is offset by the tax advantages of incorporation. B)  Corporations generally face fewer regulations than sole proprietorships. C)  It is usually easier to transfer ownership in a corporation than it is to transfer ownership in a sole proprietorship. D)  Corporate shareholders are exposed to unlimited liability. E)  There is a tax disadvantage to incorporation, and there is no way any corporation can escape this disadvantage, even if it is very small. Points Earned:  5.0/5.0  Correct Answer(s): C 2.  Which of the following statements is CORRECT? A)  Corporations are taxed more favorably than sole proprietorships. B)  Corporations have unlimited liability. C)  Reducing the threat of corporate takeover increases the likelihood that managers will act in shareholders' interest. D)  Because of their size, large corporations face fewer regulations than smaller corporations and sole proprietorships. E)  Bond covenants are designed to protect bondholders and to reduce potential conflicts between stockholders and bondholders. Points Earned:  5.0/5.0  Correct Answer(s): E 3.  Which of the following statements is CORRECT? A)  Bond covenants are a good way to resolve agency conflicts between stockholders and managers. B)  The bid price in a hostile takeover is generally below the price before the takeover attempt is announced because takeover targets are generally not very well managed companies. C)  Takeovers are more likely to be attempted if the target firm's stock price is above its intrinsic value. D)  The efficiency of the U.S. economy would probably be increased if hostile takeovers were
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absolutely forbidden. E)  The bid price in a hostile takeover is generally above the price before the takeover attempt is announced because otherwise the takeover attempt would probably fail. Points Earned:  5.0/5.0  Correct Answer(s): E 4.  Which of the following statements is CORRECT? A)  Because of their simplified organization, it is easier for sole proprietors and partnerships to raise large amounts of outside capital than it is for corporations. B)  One advantage to forming a corporation is that the owners of the firm have limited liability. C)  Bond covenants are an effective way to resolve conflicts between shareholders and managers. D)  Corporations face few regulations and more favorable tax treatment than do sole proprietorships and partnerships. E)  Managers who face the threat of hostile takeovers are less likely to pursue policies that maximize shareholder value compared to managers who do not face the threat of a hostile takeover. Points Earned: 
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quiz 1 finance - Which of the following statements is...

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