Chap 1- Wordy! Flashcards Preview

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Flashcards in Chap 1- Wordy! Deck (6)
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1
Q

Agency costs

A

Costs to shareholders when managers don’t run business in their best interest - maximise share price

2
Q

Asymmetric info

A

One party has more info than another e.g financial accounts - managers could insider trade

3
Q

Sole trader

A

Owned by 1 person

Personally responsible for debts

4
Q

Partnership

A

Owned by more than 1
Personally responsible for debts
Partnership agreement- rights, how profits shared

5
Q

Limited liability partnership

A

Business is separate legal identity - limited to capital in bus
Partnership agreement
Accounting agreement- taxed similar to partnership

6
Q

Public limited company

A

Separate legal identity
Limited to value of shares (par value)
Annual audited accounts
Articles of association- rights of shared holders rules to run comp
Memorandum of association - intention to form company company
Registered on stock exchange
Share capital > 50,000
Ownership can change without impacting running
Agency problems and info asymmetries