Business Ownership Structures Quiz

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What is a characteristic of a sole proprietorship?

Can issue stock to raise capital
Provides limited liability to the owner
Owned by a single person (correct)
Requires multiple partners

What is a distinguishing feature of a corporation?

Restriction on raising capital
Ownership by shareholders (correct)
No limited liability protection
Joint authority of partners

What is a potential disadvantage of a partnership?

No resource limitations
Limited managerial perspective
Unlimited liability (correct)
Single layer of taxation

What is a benefit of a limited liability company (LLC)?

Limited liability for individual partners (A) Signup and view all the answers

What is the role of the board of directors in a corporation?

They are elected by shareholders as representatives for the company's direction and selection of top executives. (C) Signup and view all the answers

What is a hostile takeover?

An action taken by one company to buy a controlling interest in the voting stock of another company against the wishes of management. (A) Signup and view all the answers

What is the purpose of a joint venture?

To create an operation that is more tightly integrated than a strategic alliance. (A) Signup and view all the answers

What is shareholder activism?

When shareholders pressure management on matters ranging from executive pay to corporate responsibility. (B) Signup and view all the answers

What are some disadvantages of LBO (Leveraged Buyout)?

They come up with the money, decide which managers will be in charge, merge marketing and sales efforts, reconcile information systems, and deal with redundant employees. (C) Signup and view all the answers

What is the main advantage of a strategic alliance?

It has less risk and work than permanently integrating two companies. (B) Signup and view all the answers

What is the primary responsibility of corporate officers?

They run the corporation with the CEO being the highest ranking officer. (B) Signup and view all the answers

Which business structure offers joint authority and unlimited liability?

Partnership (B) Signup and view all the answers

What is a distinguishing feature of a limited liability partnership (LLP)?

Limited liability for individual partners in certain professions (D) Signup and view all the answers

Which business structure allows the legal entity to be distinct from individuals with the power to own property and conduct business?

Corporation (D) Signup and view all the answers

What is a potential disadvantage of a sole proprietorship?

Unlimited liability (B) Signup and view all the answers

What is a defining characteristic of a hostile takeover?

It is an action taken against the wishes of the target company's management (A) Signup and view all the answers

What is a primary responsibility of the board of directors in a corporation?

Selecting officers and guiding corporate affairs (B) Signup and view all the answers

What is an advantage of a leveraged buyout (LBO)?

It increases the buying power and size of the acquiring company (C) Signup and view all the answers

What is a distinguishing feature of a strategic alliance?

It involves long-term partnerships between companies (A) Signup and view all the answers

What is an important aspect of shareholder activism?

Pressuring management on matters ranging from executive pay to corporate responsibility (A) Signup and view all the answers

What does a joint venture involve?

Combining resources and expertise of two companies for a specific project or goal (C) Signup and view all the answers