FIN 534 RANK Change The World /fin534rank.com FIN 534 RANK Change The World /fin534rank.com | Page 32

d. Corporations and partnerships have an advantage over proprietorships
because a sole proprietor is exposed to unlimited liability, but the
liability of all investors in the other types of businesses is more limited.
e. The potential exists for agency conflicts between stockholders and
managers.
5. Which of the following statements is NOT CORRECT?
a. When a corporation’s shares are owned by a few individuals and are
not traded on public markets, we say that the firm is “closely, or
privately, held."
b. “Going public” establishes a firm's true intrinsic value, and it also
insures that a highly liquid market will always exist for the firm’s shares.
c. When stock in a closely held corporation is offered to the public for
the first time, the transaction is called “going public,” and the market for
such stock is called the new issue market.
d. Publicly owned companies have shares owned by investors who are
not associated with management, and public companies must register
with and report to a regulatory agency such as the SEC.
e. It is possible for a firm to go public and yet not raise any additional
new capital at the time.
-----------------------------------------------------------------------------
FIN 534 Week 1 Chapter 2 Solution
FOR MORE CLASSES VISIT
www.fin534rank.com