Question 3
The pros of the sole proprietorship involve the simplicity in the decision making process as well as low organizational and the operational expenses. The key drawback involves the unlimited liability to the owner of the firm where he can lose all his personal properties as well as capital in case the firm incurs any losses.
Question 4
A limited partnership tends to allow some of the partners so as to limit their liability. Under this type of the arrangement one or more of the partners are the designated general partners tend to have the unlimited liability for the debts of the company (Block & Hirt, 2015).
Question 5
The board of directors
Question 6
The articles of incorporation
Question 7
The agency theory tends to examine the relationship between the principle as well as the agent or the owner and the employees of the firm. It is essential in the public company and this is because the management is not the same as the owner in case of the private corporation and the management of the firm tends of serve as the agent where his decisions should be aligned in the interests of the owners of the company (Block & Hirt, 2015). The interests of the corporation can tend to conflict with the management’s financial decision making process.
Question 9
The challenge with the profit maximization goal involves the failure to consider the risk factor, the time of the paybacks and the profit is measured in an imprecise way. The owner’s wealth maximization goal means that the company tends to attain the greatest likely total valuation in market and therefore it is a principal goal of an entity and thus should be tend to influence every decision of the firm.
Question 10
Insider trading tends to take place when an individual with the non-public information tends to purchase or else sell securities so as to gain from the private statistics. The Securities and Exchange Commission is the solely accountable for ensuring protection of the markets against the insider trading. In the past the Securities and Exchange Commission has prosecuted those individual who have earned profits from the inside information (Block & Hirt, 2015).
Question 11
Money markets involves the markets that tend to deal with the short-range securities that have a one year of maturity or less while the capital markets involve the securities that have more than one year duration.
Question 12
Primary market involves the practice of the financial markets so as to increase the funds for the company and after the securities of the firm are traded in the public they this securities tend to trade in the secondary market. The secondary market is the market where selling and buying of the securities between the other investors tend to take place.
Question 13
The companies with the equal degree of risk, with the anticipations of the great returns will tend to have the greater common stock prices that are comparative to the firms with the anticipations of the adverse earnings.
Question 14
The restructuring process may lead to the changes in the capital structure and it can also lead in the trading of the little profit margin dissections with the earnings so as to reinvest in better investment opportunities. It can also lead in the removal of the present management team or else reduction in the workforce of the company. The institutional investors have influenced the process of restricting in various entities.
Question 15
Sarbanes-Oxley impact the company’s financial reports through the compliance rules of distribution, automation as well as detailing financial data. The Sarbanes-Oxley requires the disclosure of the additional events or the activities as well as requires more rapid disclosure of the financial information for the standard reports that include the queerly and the annual for the specific activities or events.
References
Block, S. & Hirt, G. (2015). Foundations of financial management (16th ed.). Homewood, Ill.: R.D. Irwin.
