Economics Chapter 8
Corporate Charter
A license permitting the formation of a new corporation
Unlimited Liability
A major disadvantage of partnerships.
Vertical combination
A merger between two or more companies involved in different production phases of the same good or service.
Horizontal Combination
A merger between two or more companies producing the same good or service
Cooperative
A type of business that is owned collectively by its members.
Principal
Actual amount of money borrowed from a bondholder.
Franchise
An enterprise that uses the original company's name to sell goods or service.
Collateral
Anything of value that a borrower agrees to give up if s/he cant repay a loan.
Articles of Incorporation
Application for a license to form a corporation
Specialization
Assigning duties to partners based on their skills
A merger between two or more companies producing or marketing unrelated products is a?
Conglomerate Combination
True or False? Partnerships are not easy to set up
False
True or False? Sole proprietorships do not have to observe zoning laws or other government regulations.
False
True or False? There are no disadvantages to establishing a sole proprietorship
False
True or False? There is only one kind of partnership-the general partnership.
False
Because mergers may reduce competition in the marketplace, they can lead to?
Higher prices for consumers
One major advantage of corporate mergers is?
Increased efficiency
Which of these forms of business organizations does not focus on financial gain for its members?
Nonprofit organization
Merger
Occurs when one company joins with or absorbs another
Share
Portions of ownership of a firm
Interest
Predetermined amount that a borrower must pay for the use of the funds borrowed.
Preferred Stock
Provides guaranteed dividends, but does not grant shareholders a voice in running the corporation
Common Stock
Provides stockholders with a voice in how the company is run and a share in dividends
Liability
Responsibility for debt
Stock
Sold by corporations to raise funds
Zoning Law
Specific areas where various types of business activities can be pursued.
Conglomerates tend to acquire distinct divisions known as?
Subsidiaries
Longevity
The amount of time a business operates
True or False? Doctors, lawyers, and accountants often form partnerships.
True
True or False? Partnerships allow the sharing of responsibility, decision making, and business losses.
True
True or False? Sole proprietorships often have a shorter life span than other types of business organizations.
True
True or False? The Sole proprietorship is the oldest, simplest, and most common type of business organization
True
True or False? The advantages of establishing a sole proprietorship are ease of start-up, full control, and exclusive right to profit.
True
True or False? The disadvantage of partnerships include unlimited liability and the potential for conflict among partners.
True
Partnership
a business owned by two or more people
General Partnership
a type of partnership in which all partners share equally in both responsibility and liability
Sole Proprietorship
business owned and operated by one person
Corporate Bond
Certificate issued by a corporation in exchange for money borrowed from an investor.
Board of directors
Decision making body of a corporation
Limited Partnership
The type of partnership in which partners rarely take an active role in business decisions.
