CORPORATE ISSUERS EXAMINATION SET ACTUAL TEST PAPER QUESTIONS CORRECT
ANSWERS GRADED A PLUS
Question:
General Partnership.
Answer:
Two or more individuals own and operate a business. Partners have unlimited liability. A
partnership agreement states each partner's responsibilities for business operations and their shares
of profit or loss. Each partner's share of the profits is taxed as personal income
Question:
Limited Partnership.
Answer:
General partners operate a business and have unlimited liability, while limited partners are liable
only for the amount they invest. General partners generally receive a larger portion of the profits
than limited partners. Profits are taxed as personal income to each partner
Question:
Corporation.
Answer:
Legal entity separate from its owners and operators. All owners have limited liability. Owners
(shareholders) are separate from operators (managers). Shareholders have voting rights that allow
them to elect a board of directions. May be subject to DOUBLE taxation.
Question:
Initial Public Offering (IPO).
Answer:
, the company must meet exchange-specific requirements. Companies typically engage the services
of an investment bank to underwrite the issue
Question:
Direct Listing.
Answer:
a stock exchange agrees to list a private company's existing shares. This differs from an IPO in that
the direct listing does not raise any new capital for the company
Question:
Special Purpose Acquisition Company (SPAC).
Answer:
corporate structure set up to acquire a private company in the future. The SPAC raises capital
through an IPO and puts the funds into a trust that it must use to make an acquisition within a
specified time
Question:
Shareholder Theory.
Answer:
the primary focus of corporate governance is the interests of the firm's shareholders, which are taken
to be the maximization of the market value of the firm's common equity
Question:
Stakeholder Theory.
Answer:
The focus is broader, considering conflicts among groups such as shareholders, employees,
suppliers, and cusotmers
ANSWERS GRADED A PLUS
Question:
General Partnership.
Answer:
Two or more individuals own and operate a business. Partners have unlimited liability. A
partnership agreement states each partner's responsibilities for business operations and their shares
of profit or loss. Each partner's share of the profits is taxed as personal income
Question:
Limited Partnership.
Answer:
General partners operate a business and have unlimited liability, while limited partners are liable
only for the amount they invest. General partners generally receive a larger portion of the profits
than limited partners. Profits are taxed as personal income to each partner
Question:
Corporation.
Answer:
Legal entity separate from its owners and operators. All owners have limited liability. Owners
(shareholders) are separate from operators (managers). Shareholders have voting rights that allow
them to elect a board of directions. May be subject to DOUBLE taxation.
Question:
Initial Public Offering (IPO).
Answer:
, the company must meet exchange-specific requirements. Companies typically engage the services
of an investment bank to underwrite the issue
Question:
Direct Listing.
Answer:
a stock exchange agrees to list a private company's existing shares. This differs from an IPO in that
the direct listing does not raise any new capital for the company
Question:
Special Purpose Acquisition Company (SPAC).
Answer:
corporate structure set up to acquire a private company in the future. The SPAC raises capital
through an IPO and puts the funds into a trust that it must use to make an acquisition within a
specified time
Question:
Shareholder Theory.
Answer:
the primary focus of corporate governance is the interests of the firm's shareholders, which are taken
to be the maximization of the market value of the firm's common equity
Question:
Stakeholder Theory.
Answer:
The focus is broader, considering conflicts among groups such as shareholders, employees,
suppliers, and cusotmers
