In a limited-liability company, the ________
A) members are personally liable to pay the entity's debts
B) business pays income tax on earnings
C) members are liable for each other's actions
D) members pay income tax on their share of earnings
D
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Which of the following requirements has to be met for a holder to qualify as a holder in due course (HDC) under the shelter principle?
A) The holder must not be in possession of a prior negotiable instrument. B) The holder must have notice of a defense or claim against the payment of the instrument. C) The holder must have been a party to a fraud or an illegality affecting the instrument. D) The holder must have acquired the instrument from an HDC.
Investment A has an expected return of 14% with a standard deviation of 4%, while investment B
has an expected return of 20% with a standard deviation of 9%. Therefore, A) rational investors could pick either A or B, depending on their level of risk aversion. B) a rational investor will pick investment B because the return adjusted for risk (20% - 9%) is higher than the return adjusted for risk for investment A ($14% - 4%). C) a risk averse investor will definitely select investment A because the standard deviation is lower. D) it is irrational for a risk-averse investor to select investment B because its standard deviation is more than twice as big as investment A's, but the return is not twice as big.