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

Answer 1