Chapter One
the decision to issue additional shares of stock is an example of
a capital structure decision
which of the following individuals have unlimited liability for a firms debts based on their ownership interest
both general partners and sole proprietors
which one of the following terms is defined as the mixture of a firm's debt and equity financing
capital structure
a _____ has all the respective rights and privileges of a legal person
corporation
which business form is best suited to raising large amounts of capital
corporation
one disadvantage of the corporate form of business ownership is the
double taxation of distributed profits
a business formed by two or more individuals who each have unlimited liability for all of the firms business debts is called a
general partnership
a limited partnership
has at least one partner who has unlimited liability for all of the partnership's debts
which one of the following questions is a working capital management decision
how much inventory should be on hand for immediate sale
a general partner
is personally responsible for all partnership debts
a limited liability company
is taxed similar to a partnership
Sam, Alfredo, and Juan want to start a small U.S. business. Juan will fund the venture but wants to limit his liability to his initial investment and has no interest in the daily operations. Sam will contribute his full efforts on a daily basis but has limited funds to invest in the business. Alfredo will be involved as an active consultant and manager and will also contribute funds. Sam and Alfredo are willing to accept liability for the firm's debts as they feel they have nothing to lose by doing so. All three individuals will share in the firm's profits and wish to keep the initial organizational costs of the business to a minimum. Which form of business entity should these individuals adopt?
limited partnership
which one of the following is a primary market transaction
sale of a new share of stock to an individual investor
financial managers should primarily focus on the interests of
shareholders
which one of the following statements concerning a sole proprietorship is correct
the life of a sole proprietorship is limited
which one of the following statements concerning a sole proprietorship is correct
the owner of a sole proprietorship is personally responsible for all the company's debts
the primary advantage of being a limited partner is
the partners maximum loss is limited to their capital investment
Shareholder A sold 500 shares of ABC stock on the New York Stock Exchange. This transaction:
was facilitated in the secondary market
an example of a capital budgeting decision is deciding
whether or not to purchase a new machine for the production line