Unit 3 Flashcards
(64 cards)
Partnership
Owned by 2 or more; <$25k
Sole proprietorship
Single owner; <$25k
Corporation
Owned by stockholders; two types-closely & privately held
Advantages of sole, partnership and corporation
Sole-easy to start, few regulations
Partnership- easy to start, shared decisions
Corporation- longer life, stockholder not responsible
Disadvantages of sole, partnership, and corporation
Sole- limited resources, lack permanence, total liability
Partnership- conflict, one has liability
Corporation- difficult to start, regulations, double taxation
Which type of business organization is the most frequently started?
Sole
Which type produces the most goods and services?
Corporation
In what type of businesses do sole properties generally specialize?
Service business
Which type of business generates the highway percentage of net income earned in the US?
Corporation
Which type of business organization is considered the least powerful financially?
Sole proprietorship
Example of business for Sole, etc.
Sole- donut/nail
Partnership- doctors/dentist
Corporation- verizon
3 types of partnership
General- partners share equally responsibility/liability
Limited- business in which only 1 partner if requires to be a general partner
Limited liability- all partners are limited partners
Who is the CEO and how do they get into position?
Chief executive officer, voted by the board of directors
Who are the board if directors and how are they selected?
Policies and goals are set by the BOD/stockholders
What’s the role of stockholders in the corporation?
Vote and not running day to day activities
What liability do stockholders have in the event if a corporations bankruptcy?
None
Publicly and closely held corporations
Public-many shareholders who can buy or sell stock on the open market
Private- family held stocks
Three types of corporate mergers
Horizontal- forms competing in the same market
Vertical- firms in different stages
Conglomerate-businesses merging that make unrelated products
Savings accounts *
Risk-low
Return-low
Characteristics-very safe investment, very liquid (quickly turn savings into cash)
Certificate of deposit *
Risk_low
Return-high
-low liquidity, low risk of losing money
Bonds *
Risk-low
Return-high
-low liquidity, low risk if losing money
Stocks *
Risk-high
Return-dividends or stock splits
-rises and falls with stock
Mutual fund *
Risk-low
Return-high
-pools stock from broad range of companies
Mutual funds (define and describe)
Fund that pools the savings of many individuals and invests their money on a variety of stocks, bonds and others
