Finance 001

One of the disadvantages of incorporating a business is that the owners then become subject to liabilities in the event the firm goes bankrupt.

Sole proprietorships are subject to more regulations than corporations.

In any type of partnership, every partner has the same rights, privileges, and liability exposure as every other partner.

Sole proprietorships and partnerships generally have a tax advantage over many corporations, especially large ones.

Corporations of all types are subject to the corporate income tax.

One of the disadvantages of a sole proprietorship is that the proprietor is exposed to unlimited liability.

It is generally easier to transfer one's ownership interest in a partnership than in a corporation.

One of the advantages of the corporate form of organization is that it avoids double taxation.

One of the advantages of a corporation from a social standpoint is that every stockholder has equal voting rights, i.e., "one person, one vote."

Corporations of all types are subject to the corporate income tax.

Assuming Cheers is profitable, less of its income will be subject to federal income taxes.

Cheers' shareholders (the ex-partners) will now be exposed to less liability.

Cheers' investors will be exposed to less liability, but they will find it more difficult to transfer their ownership.

Cheers will now be subject to fewer regulations.

Cheers will find it more difficult to raise additional capital.

It is generally more expensive to form a proprietorship than a corporation because, with a proprietorship, extensive legal documents are required.

Corporations face fewer regulations than sole proprietorships.

One disadvantage of operating a business as a sole proprietorship is that the firm is subject to double taxation, at both the firm level and the owner level.

One advantage of forming a corporation is that equity investors are usually exposed to less liability than in a regular partnership.

If a regular partnership goes bankrupt, each partner is exposed to liabilities only up to the amount of his or her investment in the business.

It is usually easier to transfer ownership in a corporation than it is to transfer ownership in a sole proprietorship.

Corporate shareholders are exposed to unlimited liability.

Corporations generally face fewer regulations than sole proprietorships.

Corporate shareholders are exposed to unlimited liability, and this factor may be compounded by the tax disadvantages of incorporation.

Shareholders in a regular corporation (not an S corporation) pay higher taxes than owners of an otherwise identical proprietorship.

Corporations generally find it relatively difficult to raise large amounts of capital.

Less of a corporation's income is generally subjected to taxes than would be true if the firm were a partnership.

Corporate shareholders escape liability for the firm's debts, but this factor may be offset by the tax disadvantages of the corporate form of organization.

Corporate investors are exposed to unlimited liability.

Corporations generally face relatively few regulations.

This is an example of an exchange of physical assets.

This is an example of a primary market transaction.

This is an example of a direct transfer of capital.

This is an example of a money market transaction.

This is an example of a derivatives market transaction

If expected inflation increases, interest rates are likely to increase.

If individuals in general increase the percentage of their income that they save, interest rates are likely to increase.

If companies have fewer good investment opportunities, interest rates are likely to increase.

Interest rates on all debt securities tend to rise during recessions because recessions increase the possibility of bankruptcy, hence the riskiness of all debt securities.

Interest rates on long-term bonds are more volatile than rates on short-term debt securities like T-bills.

In Europe and Asia hedge funds are legal, but they are not permitted to operate in the United States.

Hedge funds have more in common with commercial banks than with any other type of financial institution.

Hedge funds have more in common with investment banks than with any other type of financial institution.

In the United States hedge funds are legal, but in Europe and Asia they are not permitted to operate.

The justification for the "light" regulation of hedge funds is that only "sophisticated" investors with high net worths and high incomes are permitted to invest in these funds, and such investors supposedly can do the necessary "due diligence" on their own rather than have it done by the SEC or some other regulator.

Foreign stocks.

Consumer automobile loans.

U.S. stocks.

Short-term debt securities.

Long-term bonds.