Which of the following statements is CORRECT? Answer One disadvantage of operati

Question

Which of the following statements is CORRECT?
Answer

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.

Relative to sole proprietorships, corporations generally face fewer regulations, and they also find it easier to raise capital.

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.

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.

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.

Explanation / Answer

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.

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