Finance Chapter 1 Homework

Chapter 1 Discussion Questions 1.
What advantages does a sole proprietorship offer? What is a major drawback of this type of organization? A major drawback is that there is unlimited liability to the owner. The advantage is simplicity of decision making and low organizational and operating costs. 2. What form of partnership allows some of the investors to limit their liability? Explain briefly. It allows some of the partners to limit their liability. With this arrangement, the partners are designated general partners and have unlimited liability for the debts of the firm.The other partners are designated limited partners and are liable only for their initial contribution.
However, the limited partners are normally prohibited from being active in the management of the firm. 3. In a corporation, what group has the ultimate responsibility for protecting and managing the stockholders’ interests? Board of directors 4. What document is necessary to form a corporation? Articles of incorporation 5. What issue does agency theory examine? Why is it important in a public corporation rather than in a private corporation? It examines the relationship between the owners of the firm and the managers of the firm.Management in privately owned firms, the owners are usually the same people. Management operates the firm to satisfy its own goals, needs, financial requirements and the like.

As a company moves from private to public ownership, management now represents all owners. This places management in the agency position of making decisions in the best interest of all shareholders. 6. Why are institutional investors important in today’s business world? Because institutional investors such as pension funds and mutual funds own a large percentage of major U. S. ompanies, they are having more to say about the way publicly owned companies are managed. As a group they have the ability to vote large blocks of shares for the election of a board of directors, which is suppose to run the company in an efficient, competitive manner.
The threat of being able to replace poor performing boards of directors makes institutional investors quite influential. Since these institutions, like pension funds and mutual funds, represent individual workers and investors, they have a responsibility to see that the firm is managed in an efficient and ethical way. 7.Why is profit maximization, by itself, an inappropriate goal? What is meant by the goal of maximization of shareholder wealth? The problem with a profit maximization goal is that it fails to take account of risk, the timing of the benefits is not considered, and profit measurement is a very inexact process. The goal of shareholders wealth maximization implies that the firm will attempt to achieve the highest possible total valuation in the marketplace. It is the one overriding objective of the firm and should influence every decision. 8.
Name two areas that finance is aligned with and field of study. Accounting and economics

Don't use plagiarized sources. Get Your Custom Essay on
Finance Chapter 1 Homework
Just from $13/Page
Order Essay
Place your order
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
The price is based on these factors:
Academic level
Number of pages
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more
Live Chat 1 763 309 4299EmailWhatsApp

Order your essay today and save 15% with the discount code GINGER