Which of the following is an advantage of the corporation?
a. Unlimited liability
b. Simplicity
c. Greater ability to raise capital
d. The owners are stockholders
Answer: The correct options are c. and d.
Corporations have several advantages, such as having a higher capacity for fund mobilization and that the owner of the company is a stockholder. Companies for instance can tap the public through for sales of stocks and bonds, which enable the institution to pool a lot of capital which can be used for expansion and investment or any other purpose. Furthermore, the ownership of a given corporation can be freely sold through transferable shares or stocks as compared to limited partnership. The stockholders, or shareholders, have legal ownership of the corporation, but their amount of exposure is limited to their monetary contributions. This limited liability preserves the responsibility of the owners from any harm of the company through maintaining the owners’ individual properties safe from the company’s debts.
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