contestada

Juan wants to be involved in business. He has plenty of capital to invest, but he does not want to be in management. He also does not want to worry about fluctuations in the market prices of debt and equity instruments. Which form of business would be best for Juan?

Respuesta :

Answer:

A corporation

Explanation:

A corporation is a form of business ownership recognized as a separate entity from its owners. The law treats the corporation as a legal person entitled to engage in business, enter into contracts, owe properties, own properties, sue, or be sued. The owners of a corporation, known as the shareholders, share in its profits by receiving dividends yearly.

Juan should invest his money in a corporation as it is the only form of business ownership that meets his criteria. As a shareholder, he will not be involved in managing the business. Juan will only participate in board members elections who, in turn, will appoint the management team. Juan does not need to worry about price fluctuations of debts instruments because, as a shareholder, he is an owner of the business and not a creditor. Juan will receive his share of profits if the business performs well, regardless of price fluctuations of the corporation's debts instruments.