Fi515 Week I Homework

Barbara Jones

FI515

August 29, 2010

1-1

A. Proprietorship is an unincorporated business owned by me individual.

1. A corporation is a legal entity created by state laws, and it is separate and

distinct from its owners and managers.

2. Partnership exists whenever two or more persons on entities associate to

conduct a noncorporate business for profit.

B. Limited partnership is a partnership in which limited partner’s liabilities,

investment returns, and control are limited, while general partners have

unlimited liability and control.

1. Limited liability partnership is a limited liability partnership (LLP),

sometimes called a limited liability company (LLC), and combines the

limited liability advantage of a corporation with the tax advantages of a

partnership.

2. Professional corporation (PC) has most of the benefits of incorporation but

the participants are not relieved of professional (malpractice) liability.

Known in some states as a professional association (PA).

C. Stockholder wealth maximization is a company’s ability to generate cash

flows and in the future.

D. Money markets are the markets for short-term, highly liquid debt securities.

1. Capital markets are the markets for intermediate-or long-term debt and

corporate stocks.

2. Primary markets are the markets in which corporations raise new capital.

3. Secondary markets are markets in which existing, already outstanding

securities are traded among investors.

E. Private market is markets in which transactions are worked out directly

between two parties and structured in any manner that appeal to them.

Bank loans and private placements of debt with insurance companies are

examples of private market transactions.

1.

Public markets are markets in which standardized contracts are traded or

organized exchanges. Securities that are issued in public markets, such

as common stock and corporate bonds, are ultimately held by a large

number of individuals.

2. Derivatives are...