1. Which of the following are possible mechanisms applicable to large corporations that motivate managers to act in the best interests of the shareholders?
a. Managerial compensation (incentives)
b. Shareholder intervention
c. Threat of a takeover by an outside entity
d. All of the above
2. Two advantages of the proprietorship as a form of business organization are (1) that it is easily and inexpensively formed and (2) subject to few government regulations.
True
False
3. Which of the following is NOT a disadvantage of the proprietorship form of business organization?
a. Setting up the corporate charter and bylaws
b. Unlimited personal liability for business debts
c. Limited to life of the individual who created the proprietorship
d. Ownership transfer issues
e. Difficulty raising large sums of capital
4. The advantages and disadvantages of the proprietorship and partnership forms of business organization are similar, except that partnerships generally have more sources available to raise funds.
True
False