Which of the following statements is CORRECT? Select one: a. A hostile takeover

Question

Which of the following statements is CORRECT?

Select one:

a. A hostile takeover is the main method of transferring ownership interest in a corporation.

b. Unlimited liability and limited life are two key advantages of the corporate form over other forms of business organization.

c. A corporation is a legal entity that is generally created by a state, and it has a life and existence that is separate from the lives of its individual owners and managers.

d. Limited liability of its stockholders is an advantage of the corporate form of organization, but corporations have more trouble raising money in financial markets because of the complexity of this form of organization.

e. Although its stockholders are insulated by limited legal liability, the legal status of the corporation does not protect the firm's managers in the same way, i.e., bondholders can sue its managers if the firm defaults on its debt, even if the default is the result of poor economic conditions.

Explanation / Answer

Answer:

Statement A is incorrect as there are many other ways of transferring ownership interest.

Statement B is incorrect as the corporate have limited liability and unlimited life.

Statement C is correct as corporation is legal entity and has a separate identity than it owners / members.

Statament D is incorrect as corporations have no trouble raising money in financial markets.

Statement E is incorrect as legal status of the corporation actually protect the firm's managers because of the separate legal identity of the corporate.

Hence our answer shall be :

Statement C: A corporation is a legal entity that is generally created by a state, and it has a life and existence that is separate from the lives of its individual owners and managers.

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.