Business organization forms and taxation structures
This paper answers a quiz about a number of different concepts in finance. There are 49 questions, and they are all multiple choice, or true or false in nature. The questions are not included in the paper, and there are few explanations. Only the answers are provided in this paper.
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Financial Management
Firm Organization
False. The form of business organization direct affects the taxation structure of the firm, particularly with regard to flow-through taxation on some forms (sole proprietorship, most partnerships) and not on others (most corporations).
Firm Organization
False. The partners in a regular partnership have a high degree of liability.
Partnership
True. Most partnerships remains fairly small due to these constraints.
Proprietorship
True. In a sole proprietorship, the owner holds all the capital, making it difficult to raise from outside sources, and the proprietor has all the liability associated with the business.
Limited Liability
False. The owners do see their risk reduced by limited liability, but the firm still has this risk. Therefore, the firm's value should not be reduced. The firm can still be bankrupted, leaving potential owners with nothing.
Value Maximization
a. True. Earnings per share has a strong correlation with the firm's stock price. A firm that has the objective of maximizing shareholder wealth will also be seen by investors as having good growth potential, all other factors being equal.
1.4 Financial intermediaries
a. True
1.8 Financial markets
b. False
1.8 Financial markets
a. True. The part where Hale sells to the investment banker is a primary market transaction.
1.11 Stock market transactions
a. True
1.2 Partnership
b. False Partnerships still have difficulty raising large amounts of capital
1.2 Proprietorship
a. True
Multiple Choice:
1.2 Firm Organization
13. C.
1.2 Firm Organization
14. A
1.2 Firm Organization
15. D
1.2 Firm Organization
16. C
1.2 Firm Organization
17. A
1.2 Firm organization
18. C
1.4 Financial transactions
19. B
1.6 Interest rates
20. A
1.7 Hedge Funds
21. E
1.8 Money markets
22. D
1.8 Financial markets
23. B
1.8 Financial markets
24. E
1.8 financial markets
25. c
1.9 Financial markets
26. A
1.9 Financial markets
27. A
1.9 Financial markets
28. E
1.2 Forms of organization
29. A
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