Suggested Solutions for Tutorial 5

Suggested Solutions for Tutorial 5 - 1 Suggested Solutions...

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1 Suggested Solutions for Tutorial 5 Please note that following suggested solutions are only very basic points and you need to read the textbook and other reference materials for better understanding. 2. Why might a business organisation seek listing as a publicly listed corporation? Include in your answer the advantages of the corporate form of business organisation. a publicly listed corporation is a legal entity formed under the provisions of the Corporation Law of a nation-state, and listed on a formal stock exchange shares can be readily bought and sold in the market without directly affecting the continuing existence of the business the liability of shareholders for the debts of the business is limited large amounts of equity funding can be obtained more easily through access to the stock market investors willing to purchase shares in the knowledge that the stock exchange provides an active secondary market for the future sale of those shares shareholders can reduce the risks of share ownership by holding a diversified portfolio of share investments the separation of ownership (shareholders) and control (managers) means that the corporation can choose specialised and skilled personnel to run the business the corporate form allows for continuity in the activities of the business. The death or bankruptcy of a shareholder will not impact the existence of the business. the corporate form is almost essential for large-scale undertakings. Corporations gain access to a larger and wider range of equity and debt sources of funds the separation of ownership and control enables the corporation to plan and implement strategic decisions more effectively the cost advantages of large-scale production are a further benefit of the corporate form of
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This note was uploaded on 08/30/2011 for the course AFF 1000 taught by Professor Chalmers during the Three '11 term at Monash.

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Suggested Solutions for Tutorial 5 - 1 Suggested Solutions...

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