Which of the following is the difficulty in forming a Subchapter S Corporation?
A) The owners cannot be residents of the United States.
B) There can be no more than 75 owners.
C) The stock must have a very low par value.
D) The company must promise to pay dividends quarterly.
The lack of a fixed common stock dividend provides the corporation greater flexibility versus the use of bonds or preferred stock.
Indicate whether the statement is true or false
Which of the following is the disadvantage of the corporate form of organization?
A) difficulty in raising capital
B) unlimited liability of the owners
C) finite life of the organization
D) the tax treatment of dividends
In the case of corporate bankruptcy, common stock's residual claim becomes especially valuable.
Indicate whether the statement is true or false
Common stock's residual claim on assets implies owners have a prior claim on assets before other claim holders are paid.
Indicate whether the statement is true or false
Value is created if a project's
A) incremental costs exceed incremental benefits.
B) incremental costs equal incremental benefits.
C) incremental benefits exceed incremental costs.
D) none of the above.
The three major decisions of financial management involve
A) investing, financing, and payment of dividends.
B) investing, reporting, and financing.
C) financing, diversifying, and payment of dividends.
D) investing, classifying, and financing.
The most typical common stock maturity is 20 years.
Indicate whether the statement is true or false
Maximizing revenue will always maximize the wealth of the owners.
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Indicate whether the statement is true or false
Common stock provides the investor a residual claim on both the firm's assets and the firm's cash flow.
Indicate whether the statement is true or false
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