Chapter 5

Question 1

One or more general partners and other limited partners who contribute only an investment but do not have any managing responsibility or liability

Answer 1

Limited partnership

Question 2

Acts like a corporation, taxed like a partnership

Answer 2

Master limited partnership

Question 3

According to your mistakes you lose your things

Answer 3

Limited liability partnership

Question 4

Two or more partners are responsible equally for everything

Answer 4

General partnership

Question 5

A state chartered entity that pays taxes and is legally distinct from the owners

Answer 5

C corporation

Question 6

No more than 100 owners, (share holders), but, like a partnership the owners are taxed only at the personal level

Answer 6

A corporation

Question 7

Combines the tax benefits of a sole proprietorship or partnership- one level of tax- with the limited liability of a corporation

Answer 7

Limited liability company

Question 8

Benefit corporation, whose corporate charter legally requires that the company adhere to socially beneficial practices

Answer 8

B corporation

Question 9

Benefits:

1. Easy to start up
2. Make all your own decisions
3. Keep all your profits
4. taxes easier
5. Easy to end the business

Answer 9

Benefits of a sole proprietorship

Question 10

Drawbacks

1. Unlimited liability (personal possessions at risk)
2. Limited financial resources and few fringe benefits
3. Management problems
4. Be over stressed about time

Answer 10

Drawbacks of a sole proprietorship

Question 11

Benefits

1. Business start up is relatively easy
2. More financial resources
3. More managerial and other expertise
4. Taxes relatively simple

Answer 11

Benefits of a partnership

Question 12

Drawbacks

1. Conflicts and disagreements
2. Unlimited liability
3. Hard to end or changing the partnership, can’t pass the business along

Answer 12

Drawbacks of a partnership

Question 13

Benefits

1. Little to no liability
2. Possible tax breaks
3. More financial resources
4. More managerial and other expertise
5. Easy to sell ownership shares and continue the life of a business

Answer 13

Benefits of a corporation

Question 14

Drawbacks

1. Start up and out going costs and paperwork
2. Taxes twice
3. Have to publicly disclose financial information
4. Difficult to end

Answer 14

Drawbacks to a corporation

Question 15

A cooperation owned by its user members who have pooled their resources for their mutual benefits (unlimited owners)

Answer 15

Cooperative (co ops)

Question 16

Benefits

1. Little to no liability
2. Easy to sell and continue business
3. Protected from a single shareholders dominance
4. More resilient

Answer 16

Benefits of a cooperative

Question 17

Drawbacks

1. Decision making too long
2. Difficult to get bank financing
3. Arguing among members
4. Organization never makes profit

Answer 17

Drawbacks of a cooperative

Question 18

An arrangement in which a business owner allows others the right to use its name and sell its goods or services within a specific geographical area

Answer 18

Franchise

Question 19

The buyer of a franchise

Answer 19

Franchisee

Question 20

The business owner that gives other’s the rights to sell its products or services

Answer 20

Franchisor

Question 21

Chain store, allows a franchisee to use the trade name and format of a franchisor. Following guidelines for marketing and pricing the product.

Answer 21

Business format franchise

Question 22

A franchise is given the right to sell trademarked products purchased from the franchisor

Answer 22

Product distribution franchise

Question 23

A business owned and managed by one person

Answer 23

Sole proprietorship

Question 24

Are given the right to manufacture and distribute a certain product following a formula or using supplies purchased from the franchisor

Answer 24

Manufacturing franchise

Question 25

Benefits 1. Own business, own boss 2. New enterprise, some name recognition 3. Follow someone else's proven formula for doing business 4. Receive marketing support 5. Receive management and financial support

Answer 25

Benefits of a franchise

Question 26

1. Larger initial franchise fee and other start up costs 2. Share sales with the franchisor 3. Have to endure close management by the franchisor 4. Shady practices by franchisor 5. Disappointed in pay off of your franchise

Answer 26

Drawbacks of a franchise

Question 27

Home based businesses Minorities and franchising Going international

Answer 27

Free da in franchising

Question 28

Namely, by increasing sales and capital investment

Answer 28

Internal expansion

Question 29

A company merged with it buys another company or companies

Answer 29

External expansion

Question 30

Occurs when two firms to join a new firm

Answer 30

Merger

Question 31

Occurs when one company buys another one

Answer 31

Acquisition

Question 32

Two companies merge that are in the same industry and perform the same activity

Answer 32

Horizontal merger

Question 33

Two companies merge that are in the same industry but each performs a different activity

Answer 33

Vertical merger

Question 34

Two companies merge that are in different industries and activities

Answer 34

Conglomerate merger

Question 35

Situations in which an outsider buys enough shares in a company to be able to take control of it against the will of the corporations too management and directors

Answer 35

Hostile takeovers

Question 36

An outsider seeking to take over a company directly contacts like company's shareholders and offers to buy their stock at a price that exceeds the present market price

Answer 36

Tender offer

Question 37

The outsider contacts shareholders and urges them to vote for the raiders hand picked candidates for the board of directors

Answer 37

Proxy fight

Question 38

To find a buyer for the company who is more acceptable to management

Answer 38

White knight

Question 39

One form borrows money to buy another firm

Answer 39

Leveraged buyout

Question 40

A firms employees borrow money against their own assets to purchase the firm from the present owners

Answer 40

Employee buyout