Test 2

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What are different kinds of intelligence? How are they different? Be able to identify examples.

. Cognitive intelligence involves reasoning, problem solving, memorization, and other rational skills. Emotional intelligence is a measure of a person's awareness of and ability to manage his or her own emotions. Social intelligence involves looking outward to understand the dynamics of social situations and the emotions of other people, in addition to your own. All three types of intelligence are essential to building the competencies that lead to success.

Know the meaning of the headings in a stock quotation.

. Stock: The company's name may be abbreviated in some listings. 2. Symbol: Symbol under which this stock is traded on stock exchanges. 3. 52-week high/low: Indicates the highest and lowest trading price of the stock in the past 52 weeks plus the most recent week but not the most recent trading day (adjusted for splits). Stocks are quoted in dollars and cents. In most newspapers, bold-faced entries indicate stocks whose price changed by at least 4% but only if the change was at least $0.75 a share. 4. Dividend: Dividends are usually annual payments based on the last quarterly or semiannual declaration, although not all stocks pay dividends. Special or extra dividends or payments are identified in footnotes. 5. Yield: The percentage yield shows dividends as a percentage of the share price. 6. PE: Price/ Earnings ratio, calculated by dividing the stock's closing price by the earnings per share for the latest four quarters. 7. Volume: Daily total of shares traded. The format of the numbers varies by source; some show exact numbers (as above), but others show hundreds of shares. 8. High/Low: The stock's highest and lowest price for that day. 9. Close: Closing price of the stock that day. 10. Net change: Change in share price from the close of the previous trading day.

What are the steps in the strategic planning process?

1. Define mission, vision, and values 2. Perform SWOT analysis 3. Develop forecasts 4. Analyze competition 5. Establish goals and objectives. 6. Develop action plans

What is the failure rate of new businesses and why do businesses fail?

70/80/90% Management incompetence; Lack of relevant experience; Inadequate financing; Poor Cash management; Lack of strategic planning; Ineffective marketing; Uncontrolled growth; Inappropriate location; Poor inventory control; Poor entrepreneurial skills

Sole Proprietorship

A business owned by one person (although it may have many employees). Advantages: Simplicity; Singler layer of taxation; Privacy; Flexibility and Control; Fewer limitations on personal income; Personal satisfaction. Disadvantages: Financial liability (unlimited liability); demands on the owner; Limited managerial perspective; Resource; No employee benefits for the owner; Finite Life Span.

Corporations

A corporation is a legal entity with the power to own property and conduct business. A corporation can receive, own, and transfer property; make contracts; sue; and be sued. Unlike the case with sole proprietorships and partnerships, a corporation's legal status and obligations exist independently of its owners. Enter into contracts. Buy and sell property. Sue and be sued. Face limited liability. Advantages: Limited liability; Access to capital; Increased liquidity; Unlimited life span Disadvantages: Excess paperwork; Burdensome costs; Double taxation; Disclosure requirements; Loss of control; Short term orientation

What is the difference in goals and objectives - give examples?

A goal is a broad, long-range accomplishment that the organization wishes to attain in typically five or more years, whereas an objective is a specific, short-range target designed to help reach that goal.

Define market order, limit order, stop order, margin trading, and short selling.

A market order tells the broker to buy or sell at the best price that can be negotiated at the moment. A limit order specifies the highest price you are willing to pay when buying or the lowest price at which you are willing to sell. A stop order tells the broker to sell if the price of your security drops to or below the price you set, protecting you from losing more money if prices are dropping. You can also place a time limit on your orders.

Differences in strategic alliance and joint venture.

A strategic alliance is a long-term partnership between companies to jointly develop, produce, or sell products. A joint venture is a special type of strategic alliance in which two or more firms jointly create a new business entity that is legally separate and distinct from its parents. Expand market share; Access technology; Diversity offerings; Share best practices Joint Venture: Companies can also form joint ventures to accomplish the same benefits enjoyed by strategic alliances. Joint ventures are similar to partnerships except that they are formed for a specific, limited purpose. Like strategic alliances, joint ventures have many advantages. They allow companies to use each other's complementary strengths that might otherwise take too long to develop on their own, and they allow companies to share what may be the substantial cost and risk of starting a new operation. Attain specific goals; Share strengths; Spread costs; Minimize risk.

Types of M&A.

A vertical merger occurs when a company purchases a complementary company at a different level in the value chain, such as when a company purchases one of its suppliers or one of its customers. A horizontal merger involves two similar companies at the same level, such as a combination of two car manufacturers, two windshield manufacturers, two banks, or two retail chains. In a conglomerate merger, the two firms offer dissimilar products or services, often in widely different industries. A market extension merger combines firms that offer similar products and services in different geographic markets. Companies pursue a product extension merger when they need to expand their offerings of goods or services and lack the time or resources to develop those products internally.

What are the advantages and disadvantages of franchises?

Advantages: Viable business; Name recognition; Network of support Disadvantages: Must follow format; Little decision making; Few options for changes

Consolidations - definitions, examples.

Although not strictly a merger, a consolidation, in which two companies create a new, third entity that then purchases the two original companies, is often lumped together with the other two merger approaches.

Define franchise, franchisee, and franchisor.

An alternative to buying an existing business is to buy a franchise in somebody else's business. This approach enables the buyer to use a larger company's trade name and sell its goods or services in a specific territory. In exchange for this right, the franchisee (the small-business owner who contracts to sell the goods or services) pays the franchisor (the supplier) an initial start-up fee, then monthly royalties based on sales volume. Franchises are a large and growing presence in the U.S. economy, with roughly 3,000 franchisor systems and a million individual franchised establishments.

Define 5 types of derivatives.

An option is the purchased right—but not the obligation—to buy or sell a specified number of shares of a stock or other security at a predetermined price during a specified period. Investors who trade options are betting that the price of the stock will either rise or decline. All options fall into two broad categories: puts and calls. Financial futures are similar to options, but they are legally binding contracts to buy or sell a financial instrument. Commodities—agricultural products, petroleum, metals, and other basic goods—are frequently bought and sold through futures contracts as well. Commodities futures are an essential hedging tool for many agricultural, industrial, or commercial buyers and sellers of commodities. For companies that conduct business in multiple currencies around the world, variations in exchange rates between two currencies can affect profitability. To hedge against exchange rate shifts that will affect them negatively, these firms can use currency futures, contracts to buy or sell amounts of specified currency at some future date. Credit derivatives are used to reduce a lender's exposure to credit risk. The most notable—and notorious—type is the credit default swap, which was at the center of the recent meltdown in the credit markets. These instruments have been criticized in recent years for being extremely complex, largely unregulated, and hidden from public scrutiny—despite being capable of triggering chain reactions across the economy.

What are 3 leadership styles? Be able to identify in a concept question.

Autocratic leaders make decisions without consulting others. Companies can find themselves in situations where autocratic leadership is needed to guide the firm through challenging situations or to bring uncooperative units in line. Autocratic leadership has a bad reputation because it controls the decision-making process in organizations, but companies can find themselves in situations where autocratic leadership is needed to guide the firm through challenging situations or to bring uncooperative units in line. In contrast, democratic leaders delegate authority and involve employees in decision making. Even though their approach can lead to slower decisions, soliciting input from people familiar with particular situations or issues may result in better decisions. By spreading power around, democratic leaders practice participative management. As more companies adopt the principles of teamwork, democratic leadership continues to gain popularity. Laissez-faire leaders take the role of consultants, encouraging employees' ideas and offering insights or opinions when asked. They emphasize employee empowerment—giving employees the power to make decisions that apply to their specific aspects of work. The laissez-faire style may fail if workers pursue goals that do not match the organization's. More and more businesses are adopting democratic and laissez-faire leadership as they reduce the number of management layers in their corporate hierarchies and increase the use of teamwork.

What is a SWOT analysis?

Before establishing long-term goals, a company needs to have a clear assessment of its strengths and weaknesses compared with the opportunities and threats it faces. Such analysis is commonly referred to as SWOT, which stands for strengths, weaknesses, opportunities, and threats.

What is a corporate bond?

Bonds from Corporations

Compare bonds to stocks.

Bonds offer three key advantages to investors. First, most bonds are less risky than stocks and many other investments. Second, bonds offer lower volatility than stocks, which makes them a good choice for investors who need to be able to count on earning a predictable interest rate and receiving their loaned principle back at a specific date. Third, corporate bonds with twice-yearly interest payments can provide a regular source of income. Advantages: Less risky than stocks; Less chance investment will decline; Predictable rate; Regular source of income Disadvantages: Lower average returns; Bond can be downgraded; Defaults/junk; Call provision

What are the three types of stock valuation?

Book value per share is the difference between the assets and liabilities as listed on the balance sheet, divided by the number of shares in circulation. In contrast, the market value, or market price, is the price at which the stock is actually selling in the stock market. Market value is forward looking in that it incorporates investor expectations about future earnings. This market sentiment can range from irrational optimism to irrational pessimism at the extremes, and it can push prices higher or lower than objective financial analysis would indicate. Book value is what the balance sheet says the company is worth, and market value is what the stock market says the company is worth, but intrinsic value is an attempt to establish what the company is really worth. Investors have come up with various ways to estimate intrinsic value by including both quantitative financial factors and such qualitative factors as intangible assets, management capability, and the company's competitive strengths within its industry.

How are capital gains different from personal income?

Capital Gains: Increase in the value of the stock over time

What is the difference in coaching and mentoring?

Coaching involves taking the time to meet with employees, discussing any problems that may hinder their ability to work effectively, and offering suggestions and encouragement to help them find their own solutions to work-related challenges. This process requires keen powers of observation, sensible judgment, and both a willingness and an ability to take appropriate action. Acting as a mentor is similar to coaching, but mentoring also emphasizes helping employees understand how the organization works. A mentor is usually an experienced manager or employee who can help guide other employees through the corporate maze. Mentors can explain office politics, serve as role models for appropriate business behavior, and provide valuable advice about how to succeed within the

What is the difference in common and preferred stock?

Common: Realize capital gains; Income from dividends; Right to vote; Risk/no guarantees; Volatility/uncertainty; Last claim to assets Preferred: Hybrid of stock and bond; Equity in company; Less volatile than common; Less capital gain; No voting rights; Callable; Greater claim to assets; Tax advantages for corp.

What are the stock exchanges? What are the differences in NYSE and NASDAQ?

DJIA - Dow Jones; NYSE - Big Board; 30 largest stocks; Formula using prices; Blue Chip; Long running, stable. NASDAQ: Electronic network; Growth stock; Technology stocks; Has most companies listed; Largest average daily trading volume

How does downsizing and outsourcing affect new small business development?

During hard times, many companies downsize or lay off talented employees, who then have little to lose by pursuing self-employment. Microsoft lauched during 1975 recession (William Hewlett and David Packard). "If there is a silver lining, the large-scale downsizing from major companies will release a lot of new entrepreneurial talent and ideas-scientists, engineers, business folks now looking to do other things. Oursourcing​: the parctice​ of engaging outside firms to handle either individual projects or entire business functions, creates numerous opportunities for small businesses and entrepreneurs. Some companies subcontract.

Defensive measures against M&A.

Every corporation that sells stock to the general public is potentially vulnerable to takeover by any individual or company that buys enough shares to gain a controlling interest. Basically, a hostile takeover can be launched in one of two ways: by tender offer or by proxy fight. In a tender offer, the raider offers to buy a certain number of shares of stock in the corporation at a specific price. The price offered is generally more than the current stock price so that shareholders are motivated to sell. The raider hopes to get enough shares to take control of the corporation and to replace the existing board of directors and management. In a proxy fight, the raider launches a public relations battle for shareholder votes, hoping to enlist enough votes to oust the board and management. Corporate boards and executives have devised a number of schemes to defend themselves against unwanted takeovers: The poison pill. This plan, triggered by a takeover attempt, makes the company less valuable in some way to the potential raider; the idea is to discourage the takeover from actually happening. The shark repellent. This tactic is more direct; it is simply a requirement that stockholders representing a large majority of shares approve of any takeover attempt. Of course, such a plan is viable only if the management team has the support of the majority of shareholders. The white knight. A white night is a third company invited in to acquire a company that is in danger of being swallowed up in a hostile takeover. White knights usually agree to leave the current management team in place and to let the company continue to operate in an independent fashion.

Define mission, vision, and value statement. How are they different?

First, a mission statement is a brief expression of why the company exists. This statement clearly defines the scope of the company's activities and its priorities in serving its target customers. Second, a vision statement is a brief expression of what the company aspires to be. The vision statement differs in both content and tone from the mission statement. It provides some focus without getting into the specifics of a mission statement. It also inspires employees with a clear sense of purpose. These definitions of mission and vision are not universally agreed upon, and some companies use them interchangeably. Third, a values statement identifies the principles that guide the company's decisions and behaviors and establish expectations for everyone in the organization.

What is the difference in revenue and general obligation bonds?

General obligation bonds, also called GOs, are bonds that are backed by the "full faith and credit" of the issuer, with no specific project identified as the source of funds. Revenue bonds are bonds that are backed by the revenue generated by the specific project being financed by the bond issue. In other words, the money raised by the bond offering finances the project, and the project - once complete - generates the revenues to pay the interest and principal on the bonds.

List three methods of financing through the SBA.

Get a loan through regular bank or credit union and SBA guarantees to repay loan. Small Business Investment Companies (helped fund apple, fedex, jenny craig and outback). Loans, venture capital, and management assistance.

List methods of support for business owners.

Government agencies( SBA-Score); Nonprofit organizations; Business partners; Mentors -Score (Social networks); Advisory boards; Media; Networks; Business incubators and accelerators

What is the difference in hedge and speculate?

Hedging involves taking an offsetting position in a derivative in order to balance any gains and losses to the underlying asset. Hedging attempts to eliminate the volatility associated with the price of an asset by taking offsetting positions contrary to what the investor currently has. The main purpose of speculation, on the other hand, is to profit from betting on the direction in which an asset will be moving. Speculators trade based on their educated guesses on where they believe the market is headed. For example, if a speculator believes that a stock is overpriced, he or she may short sell the stock and wait for the price of the stock to decline, at which point he or she will buy back the stock and receive a profit. Speculators are vulnerable to both the downside and upside of the market; therefore, speculation can be extremely risky.

Define the bull and bear market.

If stock prices have been rising over a long period, the industry and the media will often describe this situation as a bull market. The reverse is a bear market, one characterized by a long-term trend of falling prices.

Mergers and Acquisitions - advantages and disadvantages, definitions

In a merger, two companies join to form a single entity. Traditionally, mergers took place between companies of roughly equal size and stature, but mergers between companies of vastly different sizes is common today. Companies can merge by either pooling their resources or through a purchase of the assets of one company by the other. In an acquisition, one company simply buys a controlling interest in the voting stock of another company. Unlike the real or presumed marriage of equals in a merger, the buyer is definitely the dominant player in an acquisition. In most acquisitions, the selling parties agree to be purchased. However, in a small minority of situations, a buyer attempts to acquire a company against the wishes of management. In these hostile takeovers, the buyer tries to convince enough shareholders to go against management and vote to sell. Advantages: Economies of Scale; Efficiencies; Synergies Disadvantages: Culture Clashes; Management Distractions; High-Risk Corporate Debt

Name and define 3 roles of management.

Interpersonal roles. Management is largely a question of getting work accomplished through the efforts of other people, so managers must play a number of interpersonal roles, including providing leadership to employees, building relationships, and acting as a liaison between groups and individuals both inside and outside the company (such as suppliers, competitors, government agencies, consumers, special-interest groups, and interrelated work groups). Effective managers tend to excel at networking, fostering relationships with many people within their own companies and within the industries and communities where their companies do business. In fact, the number of "connections" one has becomes an increasingly important asset the higher one rises in an organization. Social network technologies such as Facebook have been a huge boon to managerial networking, but building interpersonal relationships via "face time" is as important as ever, too. Informational roles. Managers spend a fair amount of time gathering information from sources both inside and outside the organization. They also distribute information to employees, other managers, and other stakeholders. Today's companies have devised powerful and clever ways to collect and process information for managers. A good example is the executive dashboard, which, just like the dashboard in a car, provides quick-read summaries of vital performance variables. The increasing use of social media such as blogs and wikis for both internal and external communication is changing the nature of the manager's informational role in many companies. The smart use of social media is helping managers learn more from employees and customers and communicate back to these and other stakeholder groups more effectively. Decisional roles. From deciding how to respond to a customer complaint to deciding whether to acquire another company or develop a new product line, managers up and down the organizational ladder face an endless stream of decisions. Many of these decisions are fairly routine, such as choosing which of several job candidates to hire or setting the prices of new products. Other decisions, however, might occur only once or twice in a manager's career, such as responding to a product-tampering crisis or the threat of a hostile takeover. One of the significant changes in management in recent years is the effort to push decision making as far down the organizational pyramid as possible, giving whichever employees face a particular situation the authority to make decisions about it. This approach not only accelerates and improves work flow and customer service but also frees up higher-level managers to work on more strategic matters.

What is portfolio asset allocation?

Investors build investment portfolios, or collections of various types of investments. Managing a portfolio to balance potential returns with an acceptable level of risk is known as asset allocation, which is dividing investments among cash instruments such as money-market mutual funds, income instruments such as government and corporate bonds, and equities (mainly common stock). In general, younger investors want to focus on building capital through equity investments, whereas older investors want to focus on protecting capital through income and cash instruments, so they rebalance their portfolios over time. (Cash, Income, Equities)

List the qualities of successful entrepreneurs.

Love what they do, passion to succeed Highly disciplined Self-confident and optimistic Like to control their own destiny Relate well with others Curious and eager Learn from mistakes and see failures as opportunities Balance risk and reward

Define mutual fund.

Mutual funds are financial instruments that pool money from many investors to buy a diversified mix of stocks, bonds, or other securities. Thousands of funds are now available on the market, so choosing the right fund takes some research.

Partnership

Owned by two or more and not a corporation. General; Limited; MLP; LLP Advantages: Easy to form; Diversification of risk; Additional capital available; Tax advantages; Additional skills; Extended life Disadvantages: Unlimited liability; Potential for conflict; Expansion, succession, and termination issues

Name and define the 4 functions of management.

Planning: When they develop strategies, establish goals and objectives for the organization. Organizing: Organizing, the process of arranging resources to carry out the organization's plans, is the second major function of managers. During the organizing stage, managers think through all the activities that employees carry out, as well as all the facilities and equipment employees need in order to complete those activities. They also give people the ability to work toward organizational goals by determining who will have the authority to make decisions, to perform or supervise activities, and to distribute resources. Leading: the process of influencing and motivating people to work effectively and willingly toward company goals—is the third basic function of management. Leading becomes even more challenging in today's business environment, where individuals who have different backgrounds and unique interests, ambitions, and personal goals are melded into a productive work team. Controlling: is the management function of keeping the company's activities on track toward previously established goals. The nature of control varies widely, from making direct intervention in a process to modifying policies or systems in a way that enables employees to reach their objectives.

What is price earnings ratio? What does it tell investors about the stock price?

Price-earnings ratio, or p/e ratio, defined as the market value per share divided by the earnings per share. The p/e ratio is often used to assess how a stock is priced, based on company earnings for the previous year. If a company's management team believes that the firm's shares are undervalued, it can opt to repurchase some of the shares through a stock buyback, thereby reducing the number of shares outstanding.

Define primary and secondary financial markets.

Primary: IPO's; Stocks and bonds; Investment bankers Secondary: Stock exchanges (Facilitate buying and selling)

What is the difference in qualitative and quantitative forecasts?

Qualitative=description based Quantiative=numbers based

What is SCORE, SBA, business incubators, and microlenders?

SCORE: Service Corps of Retired Executives (resource partner of SBA) SBA: Small Business Administration (federal help. Apply for loans, get management and financing advice and selling to federal government) Business incubators: Centers that provide "newborn" businesses with various combinations of advice, financial support, access to industry insiders and connections, facilities, and other services a company needs to get started. Microlenders: Organizations, often not-for-profit, that lend smaller amounts of money to business owners who might not qualify for conventional bank loans.

Corporate governance - how to incorporate, how it is managed, all types, board issues.

Shareholders of a corporation can be individuals, other companies, nonprofit organizations, pension funds, and mutual funds. All shareholders who own voting shares are invited to an annual meeting to choose directors, select an independent accountant to audit the company's financial statements, and attend to other business. Representing the shareholders, the board of directors is responsible for declaring dividends, guiding corporate affairs, reviewing long-term strategic plans, selecting corporate officers, and overseeing financial performance. Corporate governance has come under close scrutiny in recent years, with critics and regulators claiming that a number of corporate officials in companies such as Enron and WorldCom have failed to uphold their obligations to shareholders. The center of power in a corporation often lies with the chief executive officer, or CEO. Together with other "C"-level executives such as the chief financial officer (CFO), the chief operating officer (COO), the chief information officer (CIO), and the chief technology officer, the CEO is responsible for establishing company policies, managing corporate direction, and making the big decisions that will affect the company's growth and competitive position. Employees occupy positions is various departments: for example, operations, finance, marketing, human resources, and engineering. Common Shareholders: Individuals; Companies; Non-profits; Pensions; Mutual Funds Board of Directors: Dividends; Corporate Affairs; Strategic Plans; Select Officers; Finances Corporate Officers: Chief Executive; Chief Financial; Chief Information; Chief Technology; Chief Operations Employees of the Company: Operations; Finance; Marketing; Human Resources; Engineering

Different forms of ownership, definitions, advantages and disadvantages. Be able to identify which is best option in different situations.

Sole Proprietorship is a business owned by one person (although it may have many employees)

What are the components of the SWOT analysis, and look at examples of each?

Strengths are positive internal factors that contribute to a company's success, which can be anything from a team of expert employees to financial resources to unique technologies. Weaknesses are negative internal factors that inhibit the company's success, such as obsolete facilities, inadequate financial resources to fund the company's growth, or lack of managerial depth and talent. Identifying a firm's internal strengths and weaknesses helps management understand its current abilities so it can set proper goals. Opportunities are positive external situations that represent the possibility of generating new revenue. Shrewd managers and entrepreneurs recognize opportunities before others do and then promptly act on their ideas. Threats are negative forces that could inhibit a firm's ability to achieve its objectives. Threats are external and can include new competitors, new government regulations, economic recession, changes in interest rates, disruptions in supply, technological advances that render products obsolete, theft of intellectual property, product liability lawsuits, and even the weather. In some cases, threats can also come from internal sources.

What is included in a business plan?

Summary. In one or two pages, summarize your business concept. Clearly articulate your business model and strategy for success—astute investors know what makes a business work, and they want to know that you do, too. Describe your product's market potential. Highlight some things about your company and its owners that will distinguish your firm from the competition. Summarize your financial projections and the amount of money investors can expect to make on their investment. Be sure to indicate how much money you will need and for what purpose. Mission and objectives. Explain the purpose of your business and what you hope to accomplish. Company overview. Give full background information on the origins and structure of your venture. Management. Summarize the background and qualifications of any key management personnel in your company. Target market. Provide data that will persuade an investor that you understand your target market. Be sure to identify the strengths and weaknesses of your competitors. Marketing strategy. Explain how you can profitably meet the needs of your target market; identify the goods or services you will provide, including their unique and compelling attributes; and explain your pricing, distribution, and promotion strategies.

How is a tactical plan different from a strategic plan?

Tactical Plans: Plans that define the actions and the resource allocation necessary to achieve tactical objectives and to support strategic plans. Operational Plans: Plans that lay out the actions and the resource allocation needed to achieve operational objectives and to support tactical plans.

Define intrapreneurship and list barriers in organizations to entrepreneurial efforts.

The entrepreneur's innovative spirit is so compelling that many large companies and individuals within companies now try to express it through intrapreneurship, which encourages entrepreneurial thinking while working for someone else. Organizations can develop habits based on behaviors and decisions that made sense in the past but that no longer make sense as the business environment changes. To encourage the entrepreneurial spirit, companies such as Google and W.L. Gore (known most for its Gore-Tex waterproof fabric) take care to minimize the barriers that sap entrepreneurial energy and get in the way of creative thinking.

Define entrepreneurial spirit.

The entrepreneurial spirit is the positive, forward-thinking desire to create profitable, sustainable business enterprises. The entrepreneurial spirit is vital to the health of the economy and to everyone's standard of living, and it plays a role in every company, not just small or new firms. It can help even the largest and oldest companies become profitable and remain competitive.

Define face value, maturity date, and yield for bonds.

The face value, also called par value or denomination, is the amount of money, or principle, the bond buyer is lending to the bond issuer. Bonds are usually issued in multiples of $1,000, such as $5,000, $10,000, and $50,000. The maturity date is the date on which the principle will be repaid in full. Corporate bonds typically mature in three to seven years, whereas government bonds mature in anywhere from 30 days to 30 years. The yield on a bond is the interest income a purchaser receives from the bond.

What are three levels of management, common titles to each, and activities of each?

The three levels of management form a typical corporate hierarchy—top, middle, bottom—commonly known as the management pyramid. Top management includes those at the highest level of the organization's management hierarchy who are responsible for setting strategic goals, and they have the most power and responsibility in the organization. Typical job titles include President, CEO, and Vice President. Middle managers are those in the middle of the management hierarchy; they develop plans to implement the goals of top managers and coordinate the work of first-line managers. Middle management job titles might include Controller, District Manager, or Director. First-line managers include those at the lowest level of the management hierarchy; they supervise the operating employees and implement the plans set at the higher management levels. Supervisors and department heads are typical first-line management job titles.

Compare the different types of bonds.

Treasury bills (often referred to informally as T-bills) are short-term U.S. government bonds that are repaid in less than one year. Treasury bills are sold at a discount and redeemed at face value. The difference between the purchase price and the redemption price is, in effect, the interest earned for the time periods. Treasury notes are intermediate-term U.S. government bonds that are repaid from 1 to 10 years after they were initially issued. Treasury bonds are long-term U.S. government bonds with maturities of more than 10 years. With a newer alternative, Treasury inflation-protected securities (TIPS), the principle amount is tied to the Consumer Price Index to protect against the erosion of buying power over time. U.S. savings bonds are issued by the U.S. government in amounts ranging from $50 to $10,000. Investors who buy Series EE savings bonds pay just 50 percent of the stated value and receive the full face amount in as little as 17 years (the difference being earned interest). Once the bond's face value equals its redemption value, the bond continues to earn interest, but only until 30 years after the bonds were issued (the bond's final maturity date). Municipal bonds (often informally called munis) are issued by states, cities, and various government agencies to raise money for public projects such as building schools, highways, and airports. A general obligation bond is a municipal bond backed by the taxing power of the issuing government.

What is the difference between venture capitalists and angel investors?

Venture capitalists (VCs) are investment specialists who raise pools of capital from large private and institutional sources (such as pension funds) to fund ventures that have high growth potential and a need for large amounts of capital. VC funding often makes the headlines in the business media, such as when a highflying start-up gets an injection of $10 million or $20 million. However, VCs are extremely selective; they invest in only a few thousand companies in the United States every year. Start-up companies that can't attract VC investment often look for angel investors, private individuals who put their own money into start-ups with the goal of eventually selling their interest for a large profit. Angel investors are willing to invest smaller amounts than VCs and to stay involved with the company for a longer period of time. Many of these investors join angel networks or angel groups that invest together in chosen companies.

Why do people start their own businesses (5 reasons).

Want more control over their futures Tired of working for someone else Have new product ideas Pursue business goals important on a personal level Inability to find attractive employment

Define the different choices of accounts in mutual funds.

■ Money-market funds invest in high-quality, short-term debt issues from governments and corporations. ■ Growth funds invest in stocks of rapidly growing companies. ■ Value funds invest in stocks considered to be selling below their true value. ■ Income funds invest in securities that pay high dividends and interest. ■ Balanced funds invest in a combination of stocks and bonds. ■ Sector funds, also known as specialty or industry funds, invest in companies within a particular industry, such as technology or health care. ■ Target-date funds attempt to maintain a desirable balance of risk and growth potential based on a target retirement date. ■ Global funds invest in foreign and U.S. securities. ■ International funds invest strictly in foreign securities. ■ Socially responsible funds make investment choices based on criteria related to corporate social responsibility.


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