FINA 3332 EXAM 3 QUESTION SET WITH
RATIONALES AND CORPORATE FINANCE
APPLICATION AND THEORY REVIEW 2026
◉ areas of finance.
Answer: - financial management (corporate)
- investments (personal)
- financial markets and institutions (public)
◉ financial management (corporate).
Answer: business finance, managerial finance, corporate finance
◉ financial markets and institutions (public).
Answer: money and banking
◉ risk vs. expected return.
Answer: E(r) and risk positively related
◉ four types of firms.
Answer: (1) sole proprietorships
(2) partnerships
, (3) limited liability companies (LLC)
(4) corporations
◉ sole proprietorships.
Answer: - straightforward
- many new businesses use this organizational form
- principal limitation: no separation between firm and owner (firm
can only have 1 owner)
- owner has unlimited personal liability for any of the firm's debt
- life is limited to life of owner
- difficult to transfer ownership
◉ partnerships.
Answer: - more than one owner
- all are liable for the firm's debt (a lender can require any partner to
repay all the firm's outstanding debts)
- ends on death/withdrawal of any single partner
- can avoid liquidation if the partnership agreement provides for
alternatives such as a buyout of a deceased/withdrawn partner
◉ limited partnerships.
Answer: partnership with two kinds of owners:
RATIONALES AND CORPORATE FINANCE
APPLICATION AND THEORY REVIEW 2026
◉ areas of finance.
Answer: - financial management (corporate)
- investments (personal)
- financial markets and institutions (public)
◉ financial management (corporate).
Answer: business finance, managerial finance, corporate finance
◉ financial markets and institutions (public).
Answer: money and banking
◉ risk vs. expected return.
Answer: E(r) and risk positively related
◉ four types of firms.
Answer: (1) sole proprietorships
(2) partnerships
, (3) limited liability companies (LLC)
(4) corporations
◉ sole proprietorships.
Answer: - straightforward
- many new businesses use this organizational form
- principal limitation: no separation between firm and owner (firm
can only have 1 owner)
- owner has unlimited personal liability for any of the firm's debt
- life is limited to life of owner
- difficult to transfer ownership
◉ partnerships.
Answer: - more than one owner
- all are liable for the firm's debt (a lender can require any partner to
repay all the firm's outstanding debts)
- ends on death/withdrawal of any single partner
- can avoid liquidation if the partnership agreement provides for
alternatives such as a buyout of a deceased/withdrawn partner
◉ limited partnerships.
Answer: partnership with two kinds of owners:
