____ 34. Jane Doe, who has substantial personal wealth and income, is considering the possibility of starting a new business in the chemical waste management field. She will be the sole owner, and she has enough funds to finance the operation. The business will have a relatively high degree of risk, and it is expected that the firm will incur losses for the first few years. However, the prospects for growth and positive future income look good, and Jane plans to have the firm pay out all of its income as dividends to her once it is well established. Which of the legal forms of business organization would probably best suit her needs?

a. Proprietorship, because of ease of entry.

b. S corporation, to gain some tax advantages and also to obtain limited liability.

c. Partnership, but only if she needs additional capital.

d. Regular corporation, because of the limited liability.

e. In this situation, the various forms of organization seem equally desirable.

____ 35. Which of the following statements is CORRECT?

a. The corporate bylaws are a standard set of rules established by the state of incorporation. These rules are identical for all corporations in the state, and their purpose is to ensure that the firm's managers run the firm in accordance with state laws.

b. The corporate charter is a standard document prescribed by the state of incorporation, and its purpose is to ensure that the firm's managers run the firm in accordance with state laws. Procedures for electing corporate directors are contained in bylaws, while the declaration of the activities that the firm will pursue and the number of directors are included in the corporate charter.

c. Companies must establish a home office, or domicile, in a particular state, and that state must be the one in which most of their business (sales, manufacturing, and so forth) is conducted.

d. Attorney fees are generally involved when a company develops its charter and bylaws, but since these documents are voluntary, a new corporation can avoid these costs by deciding not to have either a charter or bylaws.

e. The corporate charter is concerned with things like what business the company will engage in, whereas the bylaws are concerned with things like procedures for electing the board of directors.

____ 36. With which of the following statements would most people in business agree?

a. A corporation's short-run profits will almost always increase if the firm takes actions that the government has determined are in the best interests of the nation.

b. Firms and government agencies almost always agree with one another regarding the restrictions that should be placed on hiring and firing employees.

c. Although people's moral characters are probably developed before they get into a business school, it is still useful for business schools to cover ethics, including giving students an idea about the adverse consequences of unethical behavior to themselves, their firms, and the nation.

d. It is not useful for a large corporation to develop a formal set of rules defining ethical and unethical behavior. Such rules generally can't be applied in many specific instances, so it is better to deal with ethical issues on a case-by-case basis.

e. "Whistle blowers," because of the courage it takes to blow the whistle, are generally promoted more rapidly than other employees.

____ 37. The primary operating goal of a publicly-owned firm interested in serving its stockholders should be to

a. Maximize the stock price per share over the long run, which is the stock's intrinsic value.

b. Maximize the firm's expected EPS.

c. Minimize the chances of losses.

d. Maximize the firm's expected total income.

e. Maximize the stock price on a specific target date.