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JAMB Economics 1984 Question 25

Question 25

Business Organisations

One disadvantage of sole proprietorship is its

  1. A.limited liability
  2. B.high profits
  3. C.high sense of ownership
  4. D.low credit rating
  5. E.low failure rate.
Show the answer and explanation

Answer: D (low credit rating)

Explanation

A sole trader has limited assets and security, so banks are unwilling to lend to him: a low credit rating.