Answer a. Relative to sole proprietorships, corporations generally face fewer re

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a. Relative to sole proprietorships, corporations generally face fewer regulations, and they also find it easier to raise capital. b. Bondholders should generally be happier than stockholders to have managers invest in risky projects with high potential returns as opposed to safe projects with lower expected returns. c. One disadvantage of operating as a corporation rather than as a partnership is that corporate shareholders are exposed to more personal liability than are partners. d. There is no good reason to expect a firm's stockholders and bondholders to react differently to the types of assets in which it invests. e. Stockholders should generally be happier than bondholders to have managers invest in risky projects with high potential returns as opposed to safe projects with lower expected returns.

Explanation / Answer

13.d. Stockholders should generally be happier than bondholders to have managers invest in risky projects with high potential returns as opposed to safe projects with lower expected returns 14.e. Capital market instruments include both long-term debt and common stocks.

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