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Principles of Finance

Review Questions

Principles of FinanceReview Questions

1 .
What are the key differences between the potential life of a business that is formed as a sole proprietorship and that of a business set up as a corporation?
2 .
What are the most common types of firms that are organized as limited liability partnerships?
3 .
What advantages does a sole proprietorship offer?
4 .
What are major disadvantages of a sole proprietorship?
5 .
If a company wishes to limit the liability of some of its investing partners, what form of business might it consider? Explain briefly.
6 .
In order to form a corporation, what is the most important document required?
7 .
What is the difference between a shareholder and a stakeholder?
8 .
What group within a corporation has the primary responsibility for protecting the interests of shareholders?
9 .
What is corporate governance?
10 .
What role does a corporation’s board of directors play in corporate governance?
11 .
Briefly explain the concept of corporate governance.
12 .
What is the key component of agency theory, and why might this be more important to a public company than to one that is privately held?
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