Which of the following statements is CORRECT? O 1) Corporations are taxed more favorably than proprietorships. O 3) O 2) Corporations have unlimited liability. Because of their size, large corporations face fewer regulations than smaller corporations and proprietorships. O 4) 5) Reducing the threat of corporate takeover increases the likelihood that managers will act in shareholders' interests. Bond covenants are designed to protect bondholders and to reduce potential conflicts between stockholders and bondholders.

Which of the following statements is CORRECT? 1) Corporations are taxed more favorably than proprietorships. 2) Corporations have unlimited liability. 3) Because of their size, large corporations face fewer regulations than smaller corporations and proprietorships. 4) Reducing the threat of corporate takeover increases the likelihood that managers will act in shareholders' interests. 5) Bond covenants are designed to protect bondholders and to reduce potential conflicts between stockholders and bondholders