BUSINESS STRUCTURES, part 1 - Auburn University



BUSINESS STRUCTURES

Questions from ppt_business_structures

1. How are sole proprietorships, partnerships, LLCs, and joint-stock companies similar and different in terms of the company's owner's personal liability for problems of the business?

2. Define stock (in terms of joint-stock companies)

3. Why is there stock?

4. List the five ways of raising capital for a business discussed in lecture.

5. Define initial public offering. What is its usual abbreviation [A: IPO]? [See question 5 above.] How does buying stock in an IPO differ from buying stock later; specifically, how does the recipient of the money differ?

6. T F Most of the time when one buys stock in a company, the company does not receive any money.

7. Give an example of a circumstance when the money people spend in buying a company's stock actually ends up in the company's pocket.

9. tf When someone buys stock in an IPO, most of the money goes to the corporation.

10. ______ stock usually has rights to vote for directors, to vote on stockholder [shareholder] resolutions, and to receive dividends.

11. In theory (and law), who controls a corporation?

12. tf Shareholders tend to be passive in terms of controlling the behavior of managers.

13. List three of the functions of stock we covered in class

14. What does stock have to do with retirement?

15. How does the stock price [more precisely fluctuations in stock price] encourage short term thinking?

16. In corporate voting, what is a proxy statement?

17. Who owns stock?

18. Define institutional investor. IMPORTANT

19. List five types of institutional investors.

20. Which type of institutional investor is restricted to have only clients who can afford to lose?

21. Which college or university has the largest endowment?

22. Do retirement plans tend to push stock prices up, down, or in no particular direction? Why?

23. Name four entities within a corporation that shape the corporation's behavior.

24. _____ usually have great freedom from shareholder meddling.

25. tf Corporation boards can fire the corporation's CEO.

26. tf In general, if a shareholder does not like what a corporation is doing, the shareholder is likely to buy more stock.

27. Why might an institutional investor with large holdings of stock in a corporation choose not to sell its stock if it does not like the corporation's behavior? IMPORTANT

28. tf The law more or less requires corporations to look out for the financial interests of their shareholders.

29. List four entities outside a corporation that shape corporate behavior.

30. How do mergers of companies in the same business reduce uncertainty for the companies involved?

31. If you owe the bank $100,000 and cannot repay the loan, ______ is/are in trouble. If you owe the bank $100 million and you can't repay, ______ is/are in trouble.

32. How is corporate concentration anti-competitive?

33. What is "slack" in a business? How can slack help research and development (R&D)?

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