Reading 28: corporate structures and ownership

Question 1

Which business structure has the largest degree of separation between the owners and operators of a business?
Corporation.
Limited partnership.
General partnership.

Answer 1

In a corporation, owners are most often not directly involved in operating the business. Both general partnerships and limited partnerships have general partners who operate the business. (LOS 28.a)

Question 2

A public company can become a private company through a:
direct listing.
leveraged buyout.
special purpose acquisition company.

Answer 2

Leveraged buyouts can result in a public company going private. Direct listings and special purpose acquisition companies are methods for a private company to go public. (LOS 28.b)

Question 3

For a company that is financially sound, increasing the company’s rate of growth is most likely to benefit:
equity holders, but not debt holders.
both debt holders and equity holders.
neither debt holders nor equity holders.

Answer 3

Assuming a company is repaying interest and principal in full and on time, debt holders have no further claims. Equity holders benefit from company growth. (LOS 28.c)