5-3 Corporate Governance

What is a key characteristic of a corporation?

• Direct control by owners

• Personal ownership of assets

• Unlimited liability

• Limited liability

Which entity regulates public corporations in the United States?

• Department of Commerce

• Internal Revenue Service (IRS)

• Securities and Exchange Commission (SEC)

• Federal Reserve

What is a primary advantage of a private corporation?

• Mandatory public financial reporting

• Double taxation

• Fewer regulatory requirements

• Ability to sell unlimited shares to the public

What is a characteristic of a C Corporation?

• Limited to 100 shareholders

• Exempt from federal taxes

• Only individuals can be shareholders

• Double taxation

What is a unique feature of a B Corporation?

• Focus solely on maximizing shareholder value

• Certification for high social and environmental performance

• Exempt from all taxes

• Unlimited number of shareholders

How do corporations primarily raise capital?

• By reducing employee wages

• By issuing bonds and selling stock

• By cutting operational costs

• By increasing product prices

What is a bond in the context of corporate finance?

• A type of stock

• A government grant

• A debt security representing a loan

• An equity investment

What is the main difference between common and preferred stock?

• Preferred stockholders have voting rights

• Common stock has priority in asset claims

• Preferred stock has regular dividend payments

• Common stock is not traded publicly

Who is considered a shareholder?

• A person or institution owning at least one share of stock

• A supplier of the company

• Anyone who works for the company

• Any customer of the company

What is a primary responsibility of the Board of Directors?

• Managing day-to-day operations

• Setting corporate policies and strategic goals

• Auditing financial statements

• Hiring all company employees