Which of the following statements is CORRECT?

Corporations generally are subject to fewer regulations and more favorable tax treatment than sole proprietorships and partnerships. This is why corporations do most of the business in the United States.

Managers who face the threat of hostile takeovers are less likely to pursue policies that maximize shareholder value than are managers who do not face the threat of hostile takeovers.

One advantage of the corporate form of organization is that liability of the owners of the firm is limited to their investment in the firm.

Because of their simplified organization, it is easier for sole proprietorships and partnerships to raise large amounts of outside capital than it is for corporations.

Bond covenants are an effective way to resolve conflicts between shareholders and managers.