Scenario 1-1. larry linsuine is thinking of marketing a new idea he has been using. after years of experience as a deer hunter, he has perfected a tree stand that gives him an added advantage in deer hunting. he calls his new tree stand the tree hugger. he has now begun the process of manufacturing his tree stands with 20 employees working out of his garage. his life savings have provided the equity for his operation. in scenario 1-1, what type of business is larry beginning?

Which of the following statements is correct? stockholders should generally be happier than bondholders to have managers invest in risky projects with high potential returns as opposed to safe projects with lower expected returns. potential conflicts between stockholders and bondholders are increased if a firm's bonds are convertible into its common stock. takeovers are most likely to be attempted if the target firm’s stock price is above its intrinsic value. one advantage of operating a business as a corporation is that stockholders can deduct their pro rata share of the taxes the firm pays, thereby eliminating the double taxation investors would face in a partnership.