If a firm\'s board of directors wants to maximize value for its stockholders in

Question

If a firm's board of directors wants to maximize value for its stockholders in general (as opposed to some specific stockholders). It should design an executive compensation system whose goal is to maximize the stock's intrinsic value rather than the stock's current market price. True False Companies typically provide four basic financial statements; the fixed income statement, the current income statement, the balance sheet, and the cash flow statement. True False On the balance sheet, total assets must always equal the sum of total plus equity. True False Which of the following statements is CORRECT? One of the advantages of the corporate from of organization is that it avoids double taxation. It is easier to transfer one's ownership interest in a partnership than in a corporation. One of the disadvantages of a sole proprietorship is that the proprietor is exposed to unlimited liability. One of the advantages of a corporation from a social standpoint is that every stockholder has equal voting rights, i.e., "one person, one vote." Corporations of all types are subject to the corporate income tax. Which of the following statements is CORRECT? Corporations are taxed more favourably than sole proprietorships. Corporations have unlimited liability. Because of their size, large corporations face fewer regulations than smaller corporations and sole proprietorships. Reducing the threat of corporate takeover increases the likelihood that managers will act in shareholders' interests. Bond covenants are designed to protect bondholders and to reduce potential conflicts between stockholders and bondholders.

Explanation / Answer

8) OPTION A IS CORRECT - TRUE

9) Option (b) is correct - FALSE Companies typically provide three basic finacial statements - current income statement, balance sheet and the cash flow statement

10) OPTION A IS CORRECT - TRUE

1) Option (c) is correct - one of the disadvantage of a sole proprietorship is that the proprietor has unlimited liability 2) option (e) is correct

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