Which of the following statements is most correct? Select one: a. The primary goal of a publicly-owned firm is serving its managers. b. An IPO is an example of a secondary market transaction. c. One of the advantages of a corporation is limited liability. d. The partnership form of organization has easy transfer of ownership. e. None of the above answers is correct.

C) One of the advantages of a corporation is limited liability.

Explanation:

Since the corporation is a separate entity from its shareholders, the shareholders are only liable up to the total amount of money that they invested in the corporation. E. g. if you invest $10,000 in a corporation's shares, you are liable up to $10,000.

a. The primary goal of a publicly-owned firm is serving its managers. FALSE, the primary goal of a publicly-owned firm is to maximize profits and shareholders' equity.

b. An IPO is an example of a secondary market transaction. FALSE, an IPO is a primary market transaction.

d. The partnership form of organization has easy transfer of ownership. FALSE, transfer of ownership of a partnership is complicated, since the other partners must agree with it.

c. One of the advantages of a corporation is limited liability.

Explanation:

A corporation is a business venture that is formed by owners who are a seperate entity from the business. The business is a legal entity so it is liable in case of any action taken against it. The owners are not liable for actions against the company, that is why it is called limited liability company.

Other forms of businesses like sole proprietorship and partnership involves the owners in business risk.

For example if there is an adverse court ruling that requires payment of a huge judgement sum. The owners of a corporation are only liable to the extent of their stake in the company. Any extra judgement sum cannot be taken from the owner's personal assets.