FINA 3332 EXAM 1 COMPLETE PREPARATION
GUIDE WITH INTEREST RATES, DISCOUNTING,
AND CASH FLOW BASICS
◉ Types of Firms.
Answer: 1. Sole proprietorship
2. Partnership
3. Limited liability companies(LLC)
4. Corporations
◉ Sole proprietorship.
Answer: Business owned and run by one person.
Very small, few employees. difficult to transfer ownership.
◉ partnership.
Answer: Business owned and run by more than one owner.
◉ partnership key features.
Answer: All partners are liable for the firm's debt. That is a lender
can require any partner to repay all the firm's outstanding debt
,◉ partnership key features.
Answer: ends in the event of the death of withdrawal of any single
partner
◉ partnership key features.
Answer: can avoid liquidation if the agreement provides for
alternatives such as a buyout of a deceased or withdrawn partner
◉ sole proprietorship key features.
Answer: Advantage of being straightforward to set up. consequently
many new business set up.
◉ sole proprietorship key features.
Answer: Limitation is there is no separation between the firm and
the owner. investors if any, cannot hold ownership.
◉ sole proprietorship key features.
Answer: 3.Unlimited personal liability for the firm's debt. if firm
defaults on any debt payment, lender will require the owner to
repay from personal assets. (if cant pay, declare personal
bankruptcy)
◉ sole proprietorship key features.
Answer: 4. Limited life to the life of the owner.
, ◉ limited partnership.
Answer: two kinds of owners: general partners and limited partner.
General partners have same rights and privileges as partners in any
general partnership
(personally liable for firm's debt)
◉ limited partner.
Answer: liability is limited to their investment
death or withdrawal does not dissolve the partnership.
interest is transferable
no management authority
legally cannot be involved in managerial decision making for the
business
◉ limited liability.
Answer: investor's liability is limited to her investment
GUIDE WITH INTEREST RATES, DISCOUNTING,
AND CASH FLOW BASICS
◉ Types of Firms.
Answer: 1. Sole proprietorship
2. Partnership
3. Limited liability companies(LLC)
4. Corporations
◉ Sole proprietorship.
Answer: Business owned and run by one person.
Very small, few employees. difficult to transfer ownership.
◉ partnership.
Answer: Business owned and run by more than one owner.
◉ partnership key features.
Answer: All partners are liable for the firm's debt. That is a lender
can require any partner to repay all the firm's outstanding debt
,◉ partnership key features.
Answer: ends in the event of the death of withdrawal of any single
partner
◉ partnership key features.
Answer: can avoid liquidation if the agreement provides for
alternatives such as a buyout of a deceased or withdrawn partner
◉ sole proprietorship key features.
Answer: Advantage of being straightforward to set up. consequently
many new business set up.
◉ sole proprietorship key features.
Answer: Limitation is there is no separation between the firm and
the owner. investors if any, cannot hold ownership.
◉ sole proprietorship key features.
Answer: 3.Unlimited personal liability for the firm's debt. if firm
defaults on any debt payment, lender will require the owner to
repay from personal assets. (if cant pay, declare personal
bankruptcy)
◉ sole proprietorship key features.
Answer: 4. Limited life to the life of the owner.
, ◉ limited partnership.
Answer: two kinds of owners: general partners and limited partner.
General partners have same rights and privileges as partners in any
general partnership
(personally liable for firm's debt)
◉ limited partner.
Answer: liability is limited to their investment
death or withdrawal does not dissolve the partnership.
interest is transferable
no management authority
legally cannot be involved in managerial decision making for the
business
◉ limited liability.
Answer: investor's liability is limited to her investment
