Principles of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
12th Edition
ISBN: 9781259144387
Author: Richard A Brealey, Stewart C Myers, Franklin Allen
Publisher: McGraw-Hill Education
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Chapter 1, Problem 5PS
Summary Introduction
To discuss: The main implications of the separation.
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Demonstrate the consolidation process when a corporate ownership structure is characterized by mutual ownership.
Which of the following characteristics of a corporation limits a stockholder's loss to the amount of his or her investment in the stock of the corporation?
a.
Separate legal entity
b.
Separation of ownership and management
c.
Transferability of ownership
d.
Limited liability
Which of the following characteristics of a corporation limits a stockholder's loss to the amount of his or her investment in the stock of the corporation?
Question 7Answer
a.
Separate legal entity
b.
Separation of ownership and management
c.
Transferability of ownership
d.
Limited liability
Chapter 1 Solutions
Principles of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
Ch. 1.A - Prob. 1QCh. 1 - Investment and financing decisions Read the...Ch. 1 - Investment and financing decisions Which of the...Ch. 1 - Prob. 3PSCh. 1 - Prob. 4PSCh. 1 - Prob. 5PSCh. 1 - Opportunity cost of capital FH Corp. continues to...Ch. 1 - Corporate goals We can imagine the financial...Ch. 1 - Maximizing shareholder value Ms. Espinoza is...Ch. 1 - Prob. 9PS
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- 1. explain how the separation of ownership and control in american corporation might lead to poor management.arrow_forwardWhat areadvantges and disadvantages of the corporate form of business organazations?arrow_forwardDetermine if sole proprietorship, partnership, or corporation. Select all that is applicable between the three forms of business. • greater access to financial resources difficult to liquidate or terminate • separate management from ownershiparrow_forward
- The economic entity assumption requires that the activities Select one: a. of a sole proprietorship cannot be distinguished from the personal economic events of its owners. b.of an entity be kept separate from the activities of its owner. c. of different entities can be combined if all the entities are corporations. d.must be reported to the Securities and Exchange Commission.arrow_forwardDemonstrate the consolidation process when a corporate ownership structure is characterized by a connecting affiliation.arrow_forwardWhich of the following characteristics of a corporation limits a stockholders losses to the amount of investment in the stock of the corporation? Transferability of ownership Limited liability Separate legal entityarrow_forward
- Which one of the following is the least likely reason a company may acquire an ownership interest in another company? Select one: a.To benefit form an overvaluing of assets in the investee company b. To oust an inefficient management team c. To take advantage of operating and/or cost synergies d. To exercise an active role in the business' activitiesarrow_forwardWhich of the following is not a characteristic of a corporation? a.Corporations experience an ease in obtaining large amounts of resources by issuing stock. b.Corporations are organized as a separate legal taxable entity. c.Ownership is divided into shares of stock. d.A corporation's resources are limited to its individual owners' resources.arrow_forwardWhat are advantages and disadvantages of changing the company organization from sole proprietorship to an LLC?arrow_forward
- QUESTION 10 Which of the following is an organizational disadvantage of a corporation? A. Taxable entity B. Separate legal entity C. Relative ease of ownership transfer D. Limited liability of ownersarrow_forwardWhich of the following is not a consequence of a company being a separate legal entity? A. A company has perpetual succession B. A company can sue and be sued in its own name C. A company owns property in its own name D. The management of the company is not separate from the ownersarrow_forwardwhich of the which of the following statements always apply to corporations a. unlimited liability b. limited life c. ownership can be transferred without affecting operations e. managers can be fired with no effect on ownershiparrow_forward
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