Suppose your local government, threatened with bankruptcy, decided to tax the interest income on its own bonds as part of an effort to rectify serious budgetary woes. What would you expect to see happen to the yields on these bonds? a) You would expect the yields to rise to compensate investors for the loss of the tax-exempt status. b) You would expect the yields to fall due to increased default risk. c) You would expect the yields to fall due to decreased default risk. d) You would expect the yields to rise due to increased default risk.

Which of the following statements is correct? a major disadvantage of a partnership relative to a corporation is the fact that federal income taxes must be paid by the partners rather than by the firm itself. in a typical partnership, liability for other partners’ misdeeds is limited to the amount of a particular partner’s investment in the business.true in a limited partnership, the limited partners have voting control, while the general partner has operating control over the business, and the limited partners are individually responsible, on a pro rata basis, for the firm’s debts in the event of bankruptcy. partnerships have more difficulty attracting large amounts of capital than corporations because of such factors as unlimited liability, the need to reorganize when a partner dies, and the illiquidity of partnership interests.