fundamentals of corporate finance 11th canadian edition By Stephen A. Ross Test bank
C) investors buy from and sell to other investors.
D) the security issuer is the seller and the buyer is a member of the general public.
E) the security issuer is the buyer and the seller is a member of the general public.
164) The division of profits and losses between the members of a partnership is formalized in the:
A) Indemnity clause.
B) Indenture contract.
C) Statement of purpose.
D) Partnership agreement.
E) Group charter.
165) Which of the following is a disadvantage of the corporate form of ownership?
A) Limited liability.
B) Ease of transfer of ownership.
C) Taxation.
D) Ability to raise capital.
E) The life of the corporation.
166) A partnership:
A) Is taxed the same as a corporation.
B) Agreement defines whether the business income will be taxed like a partnership or a corporation.
C) Terminates at the death of any general partner.
D) Has less of an ability to raise capital than a proprietorship.
E) Allows for easy transfer of interest from one general partner to another.
167) The best definition of corporate governance is:
A) The possibility of conflicts between shareholders and management in a large corporation.
B) The process of planning and managing a firm's long-term investments.
C) The actions that are deemed as socially responsible.
D) The way shareholders agree on corporate capital structure.
E) The mechanisms and processes by which corporations are directed and controlled.
168) The possibility of conflict of interest between the stockholders and management of the firm is called:
A) The shareholders' conundrum.
B) Corporate breakdown.
C) The agency problem.
D) Corporate activism.
E) Legal liability.
169) Bylaws are:
A) The terms by which partnership profits are distributed.
B) The rules by which corporations govern themselves.
C) The agreements specifying which partners are general partners and which are limited partners.
D) The documents which set forth the business purpose of a firm.
E) The documents which specify how tax liabilities will be allocated among the owners.
170) Which of the following is not a capital budgeting decision?