Question

Which statement best describes corporations in the United States?

Answer 1

The correct answer is C.

Corporations are organizations constituted with the purpouse of conducting an economic activity (manufacturing industry, provision of services, etc). Corporations divide its capital in many pieces with the same value each, called shares, and these are sold in the capital markets as a mechanism to seek funding from investors. Investors who buy a share from the corporation become its owners but only in the proportion that the value of his shares represents out of the total capital. When properties are bought using that capital the corporation becomes the propietor, not its shareholders.

These owners are liable for the corporate losses up to the amount represented by the value of his shares, not personally liable which means that this person who have to respond unlimitedly with his personal patrimony. Option D is incorrect.

The existence of shares it an easy mechanism for ownership to be transfered, therefore when founders or managers die or leave the corporation continues functioning. Option B is incorrect.

When a shareholder wants to quit, he/she is free to offer the shares in the secondary capital markets. Option A is incorrect.