Corporate Finance Case Study

1375 Words 6 Pages
Register to read the introduction… | Question : | (TCO A) Which of the following statements is CORRECT? | | | Student Answer: | | One of the disadvantages of a sole proprietorship is that the proprietor is exposed to unlimited liability. | | | | It is generally easier to transfer one’s ownership interest in a partnership than in a corporation. | | | | One of the advantages of the corporate form of organization is that it avoids double taxation. | | | | 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. | | Instructor Explanation: | Explanation: Ch 1: a is correct, all others are incorrecta: Trueb: false- corporate shares provide easiest transfer of ownershipc: false- the corporate form results in double taxation- earnings are taxed at corporate level and dividends distributed are taxed at ownership leveld: corporations may issue classes of stock that differ in voting rightse. S-corps can elect to be taxed as proprietorship or partnership | | | | Points Received: | 10 of 10 | | Comments: | | | …show more content…
| Question : | (TCO D) A 15-year bond with a face value of $1,000 currently sells for $850. Which of the following statements is CORRECT? | | | Student Answer: | | The bond’s coupon rate exceeds its current yield. | | | | The bond’s current yield exceeds its yield to maturity. | | | | The bond’s yield to maturity is greater than its coupon rate. | | | | The bond’s current yield is equal to its coupon rate. | | | | If the yield to maturity stays constant until the bond matures, the bond’s price will remain at $850. | | Instructor Explanation: | Chapter 5 Explanation Bond sells at discount, require rate of return or current yield to maturity is greater than coupon rate | Thus c is correct, and a,b, d are incorrect. | E is false- the price will become $1,000 as nears maturity | | | | | Points Received: | 10 of 10

Related Documents