Nguyen Khanh Son-Chapter 1-10-Finance-2003

Nguyen Khanh Son-Chapter 1-10-Finance-2003 - Name:Nguyen...

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Name:Nguyen Khanh Son Batch 2, Troy university Chapter 1 1.1 When I bought a share of stock, I expect that that company will maximize its value in the long term through operations and dividend paid .If I buy a overstated share of stock about its profits in short term, its value will be lowered in the future years. If that company operates well, I will certain to gain profit. 1.7 The compensation should depend on how well the firm performs. Performance of company can be measured through its operations and how to maximize its value in market. It is difficult to measure performance because we only know actual value through reported profits, internet and newspapers, stock’s intrinsic value are estimate. The stock’s intrinsic value would be better because we can know exactly how that company is operating and know what companies’ stock we should invest.
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1.8 There are four business organizations: Advantages Proprietorships: have three important advantages: They are easily and inexpensively formed. They are subject to few government regulations and they are subject to lower income taxes than are cooperation. Disadvantages Proprietor have unlimited personal liability for the business’s debts, so they can lose more than the amount of money they invested in the company. The life of the business is limited to the life of the individual who created it and to bring in new equity. Proprietorship has difficulty obtaining large sums of capital. Partnership: can establish relatively easily and inexpensively. The firm can avoid the corporate income tax. Corporation: All of the partners are generally subjects to unlimited personal liability. Unlimited liability makes it difficult for partnerships to raise large amounts of capital The corporation can be easier to raise capital necessary to operate large businesses. It is easier to transfer shares of stock in a corporation than one’s interest in an unincorporated business. Corporation have unlimited lives and can lose all its money. Both LLCs and LLps are taxed like partnerships and have full control of the business, raise capital to support growth.
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LLCs and LLPs have limited liability like corporation.
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Chapter 2 2.2 There are three different ways in which capital can be transferred from suppliers of capital to those who are demanding capital Direct transfers: It occurs when a business sells it’s or bonds directly to savers without any tye of financial institution. This procedure is used mainly by small firms to raised little capital Indirect transfers through investment Bankers: Transfers may also go through an investment bank to underwrite the issue of securities. If there is a risk, the investment bank cannot resell the securities to savers for as much as it paid. Indirect transfers through a financial intermediary: Transfers can be made
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This note was uploaded on 11/23/2011 for the course MANAGEMENT 101 taught by Professor Nguyen during the Spring '11 term at Troy.

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Nguyen Khanh Son-Chapter 1-10-Finance-2003 - Name:Nguyen...

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