Advantage of Corporate Ownership: Raising Capital

Question:

What’s one advantage of the corporate form of ownership?

A. Ability to raise large amounts of money through the sale of stock

B. Unlimited liability

C. Double taxation

D. Expensive to start up

Answer:

Advantage of Corporate Ownership:

A. Ability to raise large amounts of money through the sale of stock

Explanation: One of the primary advantages of the corporate form of ownership is its ability to raise substantial capital by issuing shares of stock. This method allows corporations to gather significant amounts of money from a large number of investors, which can be used for expansion, research, development, and other business activities. Unlike sole proprietorships and partnerships, corporations can access broader financial resources through the stock market, facilitating growth and development.

The other options listed are generally disadvantages associated with the corporate structure:

Unlimited liability: Incorrect for corporations; shareholders have limited liability.

Double taxation: True, but it’s a disadvantage, not an advantage.

Expensive to start up: Generally true for corporations due to legal and administrative costs.