 | Discussion Questions
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- What advantages does a sole proprietorship offer? What is a major drawback of this type of organization?
- What form of partnership allows some of the investors to limit their liability? Explain briefly.
- In a corporation, what group has the ultimate responsibility for protecting and managing the stockholders’ interests?
- What document is necessary to form a corporation?
- What issue does agency theory examine? Why is it important in a public corporation rather than in a private corporation?
- Why are institutional investors important in today’s business world?
- Why is profit maximization, by itself, an inappropriate goal? What is meant by the goal of maximization of shareholder wealth?
- When does insider trading occur? What government agency is responsible for protecting against the unethical practice of insider trading?
- In terms of the life of the securities offered, what is the difference between money and capital markets?
- What is the difference between a primary and a secondary market?
- Assume you are looking at many companies with equal risk; which ones will have the highest stock prices?
- What changes can take place under restructuring? In recent times, what group of investors has often forced restructuring to take place?
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