Chapter 4 - 5 20171008

Question 1

One of the problems with a _________ is that there is no one with whom to share the burden of management

Answer 1

Sole Proprietorship

Question 2

The main reason for a conglomerate merger is that…

Answer 2

the business can diversify its business operations and investments

Question 3

A ___________ is one whose stock is not available to the general public through a stock exchange

Answer 3

closed corporation

Question 4

When a major national bakery bought out a smaller more regional bakery in the east, it took over all their assets and their debt and the smaller bakery ceased to exist. This is an example of _______

Answer 4

acquisition

Question 5

When your profitable franchise fails simply because other franchises have failed, this is known as the __________

Answer 5

coattail effect

Question 6

One of the advantages of a franchise is

Answer 6

receiving management and marketing expertise from the franchisor (note it ends with OR).

Question 7

International franchising is

Answer 7

a successful area for both small and large franchises

Question 8

When Pat bought a Tidy Maid franchise, she became a

Answer 8

franchisee (note it ends with EE)

Question 9

A form of ownership which can only have 100 shareholders, who must be permanent residents of the US is called_______

Answer 9

S corporation

Question 10

When the Federated Dept Stores, which owns several department store chains, both the May Company, another department store chain, so Federated could expand their product offerings, it was a _______

Answer 10

horizontal merger (expands wide)

Question 11

If you are interested in starting your own business, you want to minimize the hassle and you don’t want to have anyone tell you what to do, you should organize as a ___________

Answer 11

Sole Proprietorship

Question 12

In order to avoid a hostile takeover by K, managers at P considered making a bid fro all the company’s stock themselves and taking it off the open market, the term to describe this action is_______

Answer 12

taking the firm private

Question 13

In a corporation, the Board of Directors

Answer 13

is elected by the owners/shareholders

Question 14

When JMD was born, her American grandmother bought her 10 shares of Disney stock. As JMD grows, so will her investment. However, if Disney goes out of business….

Answer 14

JMD will only lose the value of her shares

Question 15

A new form of business ownership looks like a corporation in that it is traded on the stock exchanges like a corporation, but it is taxed like a partnership and avoids the corporate income tax. This is known as ___________

Answer 15

master limited partnership

Question 16

In a ________, members democratically control the business by electing a board of directors that hires professional management

Answer 16

Cooperative

Question 17

Which form of ownership is most common?

Answer 17

Sole proprietorships

Question 18

The owners of a corporation are called

Answer 18

stockholders

Question 19

J and M would like to start a business selling a product new to the US, called the Peraves. This is a motorcycle type vehicle. J and M are concerned about the risk of a new venture and would like to avoid losing personal assets by organizing their firm as a ______

Answer 19

Corporation

Question 20

One of the benefits a general partnership has over a sole proprietorship is __________

Answer 20

more financial resources

Question 21

Which form of partnership limits your liability to only your actions, or those of your subordinates, so that you can operate without fear that one of your partners might commit an action of malpractice that could cause you to lose your personal assets

Answer 21

Limited Liability Partnership

Question 22

When going into a partnership, you should always

Answer 22

put all terms of the partnership into writing in a partnership agreement

Question 23

At Sound Off, a store that buys and sells used c.d.s, there is only one owner, Sonia. She spends all her time running the business, and makes all the decisions. Sonia’s mother and brother put up money for her to buy the store, but they work full time at other jobs and have no management say in the running of Sound Off. This is an example of _______

Answer 23

Limited partnership

Question 24

Which of the following is NOT considered an advantage of a limited liability company

Answer 24

limited number of shareholders

Question 25

_______ can be both an advantage and a disadvantage of a conventional corporation, as they have the ability to raise large amounts of money and hire experts, but can become inflexible and tied down in red tape.

Answer 25

Size