FINC 3610 Harrelson Exam 1 2026 | ALL QUESTIONS
AND CORRECT ANSWERS | GRADED A+ | VERIFIED
ANSWERS | NEWEST VERSION (JUST RELEASED) Auburn
University
Corporation
A business created as a distinct legal entity composed of one or more
individuals or entities
Corporation (pros and cons)
Advantages: limited liability, separation of ownership and
management (unlimited life & easy transfer of ownership), and
easier to raise capital
Disadvantages: Difficult to start up (Article of incorporation, By law)
and double taxation
, -Article of incorporation
-By Law
-Stating your companies name, location of headquarters (big deal)
-How you run the business, how we are structured/ governed
-Cash management
-Credit managment
-Cash doesn't grow or gain interest
-Do we accept? risk bad debt, credit card companies keep percentage
The Agency Problem
Principal (stockholder) hires an agent (manager) to represent their
interest. Conflict of interest may occur between principal and
agent.
-Direct Agency Cost
-Indirect Agency Cost
-1. Wasteful spending 2. Monitoring and Auditing
-Missed opportunites
AND CORRECT ANSWERS | GRADED A+ | VERIFIED
ANSWERS | NEWEST VERSION (JUST RELEASED) Auburn
University
Corporation
A business created as a distinct legal entity composed of one or more
individuals or entities
Corporation (pros and cons)
Advantages: limited liability, separation of ownership and
management (unlimited life & easy transfer of ownership), and
easier to raise capital
Disadvantages: Difficult to start up (Article of incorporation, By law)
and double taxation
, -Article of incorporation
-By Law
-Stating your companies name, location of headquarters (big deal)
-How you run the business, how we are structured/ governed
-Cash management
-Credit managment
-Cash doesn't grow or gain interest
-Do we accept? risk bad debt, credit card companies keep percentage
The Agency Problem
Principal (stockholder) hires an agent (manager) to represent their
interest. Conflict of interest may occur between principal and
agent.
-Direct Agency Cost
-Indirect Agency Cost
-1. Wasteful spending 2. Monitoring and Auditing
-Missed opportunites
