Question

The more capital a firm is likely to require, the greater the probability

that it will be organized as a corporation.
A) True
B) False

Answer 1

It is true that firms with a higher need for capital are more likely to be organized as corporations, as this allows them to raise significant funds through stock sales or bond issuances.

Step-by-step explanation:

True, the greater the capital a firm requires, the more likely it will be structured as a corporation. By incorporating, a firm can raise large amounts of capital by selling stock or issuing bonds. This structure allows them to finance operations or new investments. Those who buy the stock become the firm's owners, or shareholders, and they have limited liability for the debt but share in profits and losses of the company.