1 answer

Bill, a local inventor, developed a diet pill that he believes will solve the obesity problem...

Question:

Bill, a local inventor, developed a diet pill that he believes will solve the obesity problem in the United States. Bill wants to create a new company, 50% owned by Bill and 50% owned by a major drug company. Although he believes the pills are safe, Bill is concerned about liability if someone becomes sick or dies. The best form of business organization for the new company is ________.

Select one:

a. sole proprietorship with Bill as owner and the drug company as creditor

b. general partnership with Bill and the drug company as equal partners

c. S-type corporation with Bill and the drug company owning equal shares

d. limited liability company with Bill and the drug company owning equal shares

Insurance companies invest in the "long-end" of the securities market by purchasing securities with longer maturities. In which of the following instruments would an insurance company be least likely to invest most of its assets?

Select one:

a. corporate stocks

b. corporate bonds

c. mortgages

d. commercial paper


Answers

Answer to Q#1 (First question in the list Option-(d): limited liability company with Bill and the drug company owning equal shares Reason It is given that Bill is a local inventor and wants to create a new company, 50% owned by Bill and 50% owned by a major drug company. As Bill is concerned about liability, his liability in the firm must be limited in the sense that Bills liability in the firm must be restricted only to the extent of captal contributed by him and his personal assets shall not be sued in case the firm makes any defaults in vendor payments. Also, if someone becomes sick or dies, that is Bill or the major drug company, may own equal shares in the new company. So, Option-(d): limited liability company with Bill and the drug company owning equal shares is the correct answer

.

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