Monlca Lowman

ulrecLlons Answer Lhe followlng flve quesLlons on a separaLe documenL Lxplaln how you reached Lhe answer
or show your work lf a maLhemaLlcal calculaLlon ls needed or boLh SubmlL your asslgnmenL uslng Lhe
asslgnmenL llnk ln Lhe course shell Lach quesLlon ls worLh flve polnLs aplece for a LoLal of 20 polnLs for Lhls
homework asslgnmenL
1 Wh|ch of the fo||ow|ng statements |s CCkkLC1?
a Cne of Lhe dlsadvanLages of a sole proprleLorshlp ls LhaL Lhe proprleLor ls exposed Lo unllmlLed llablllLy
b lL ls generally easler Lo Lransfer one's ownershlp lnLeresL ln a parLnershlp Lhan ln a corporaLlon
c Cne of Lhe advanLages of Lhe corporaLe form of organlzaLlon ls LhaL lL avolds double LaxaLlon
d Cne of Lhe advanLages of a corporaLlon from a soclal sLandpolnL ls LhaL every sLockholder has equal voLlng
rlghLs le one person one voLe"
e CorporaLlons of all Lypes are sub[ecL Lo Lhe corporaLe lncome Lax

2 Wh|ch of the fo||ow|ng wou|d be most ||ke|y to |ead to h|gher |nterest rates on a|| debt secur|t|es |n the
economy?
a Pouseholds sLarL savlng a larger percenLage of Lhelr lncome
b Pouseholds sLarL savlng a larger percenLage of Lhelr lncome
c 1he level of lnflaLlon beglns Lo decllne
d CorporaLlons sLep up Lhelr expanslon plans and Lhus lncrease Lhelr demand for caplLal
e 1he lederal 8eserve uses moneLary pollcy ln an aLLempL Lo sLlmulaLe Lhe economy

3 Wh|ch of the fo||ow|ng statements |s CCkkLC1?
a lf Ceneral LlecLrlc were Lo lssue new sLock Lhls year lL would be consldered a secondary markeL LransacLlon
slnce Lhe company already has sLock ouLsLandlng
b CaplLal markeL LransacLlons only lnclude preferred sLock and common sLock LransacLlons
c 1he dlsLlngulshlng feaLure beLween spoL markeLs versus fuLures markeLs LransacLlons ls Lhe maLurlLy of Lhe
lnvesLmenLs 1haL ls spoL markeL LransacLlons lnvolve securlLles LhaL have maLurlLles of less Lhan one year
whereas fuLures markeLs LransacLlons lnvolve securlLles wlLh maLurlLles greaLer Lhan one year
d 8oLh nasdaq dealers and n?SL speclallsLs" hold lnvenLorles of sLocks
e An elecLronlc communlcaLlons neLwork (LCn) ls a physlcal locaLlon exchange


4 Wh|ch of the fo||ow|ng statements |s CCkkLC1?
a A good goal for a flrm's managemenL ls maxlmlzaLlon of expecLed LS
b MosL buslness ln Lhe uS ls conducLed by corporaLlons and corporaLlons' popularlLy resulLs prlmarlly from
Lhelr favorable Lax LreaLmenL
c 8ecause mosL sLock ownershlp ls concenLraLed ln Lhe hands of a relaLlvely small segmenL of socleLy flrms
acLlons Lo maxlmlze Lhelr sLock prlces have llLLle beneflL Lo socleLy
d CorporaLlons and parLnershlps have an advanLage over proprleLorshlps because a sole proprleLor ls exposed
Lo unllmlLed llablllLy buL Lhe llablllLy of all lnvesLors ln Lhe oLher Lypes of buslnesses ls more llmlLed
e 1he poLenLlal exlsLs for agency confllcLs beLween sLockholders and managers

S Wh|ch of the fo||ow|ng statements |s NC1 CCkkLC1?
a When a corporaLlon's shares are owned by a few lndlvlduals and are noL Lraded on publlc markeLs we say
LhaL Lhe flrm ls closely or prlvaLely held
b Colng publlc" esLabllshes a flrms Lrue lnLrlnslc value and lL also lnsures LhaL a hlghly llquld markeL wlll
always exlsL for Lhe flrm's shares
c When sLock ln a closely held corporaLlon ls offered Lo Lhe publlc for Lhe flrsL Llme Lhe LransacLlon ls called
golng publlc" and Lhe markeL for such sLock ls called Lhe new lssue markeL
d ubllcly owned companles have shares owned by lnvesLors who are noL assoclaLed wlLh managemenL and
publlc companles musL reglsLer wlLh and reporL Lo a regulaLory agency such as Lhe SLC
e lL ls posslble for a flrm Lo go publlc and yeL noL ralse any addlLlonal new caplLal aL Lhe Llme