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Basic Question 1 of 4
Which of the following statements is false with respect to the major forms of businesses and the corporate governance risk inherent in each of them?
B. A sole proprietorship possesses the fewest forms of corporate governance risk of all the business forms possible.
C. With partnerships, an effective corporate governance system is possible if the partners reach agreements with respect to the rights and responsibilities of each partner.
D. Among all the business forms, the need for an effective governance system is perhaps most important for corporations.
A. A principal-agent conflict exists with all business forms.
B. A sole proprietorship possesses the fewest forms of corporate governance risk of all the business forms possible.
C. With partnerships, an effective corporate governance system is possible if the partners reach agreements with respect to the rights and responsibilities of each partner.
D. Among all the business forms, the need for an effective governance system is perhaps most important for corporations.
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Edward Liu
Learning Outcome Statements
compare the organizational forms of businesses
CFA® 2026 Level I Curriculum, Volume 2, Module 1.