Page difficulty difficult aacsb reflective thinking

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Exploring Economics
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Chapter 21 / Exercise 2
Exploring Economics
Sexton
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Page Ref: 60-61Difficulty: DifficultAACSB: Reflective thinking skillsObjective: 3.1Learning Outcome: Describe the role of small businesses in the economySkill: Application108) Discuss four sources of financing for starting up a small business. Answer: Financing for starting up a new business may come from personal resources, bank loans, venture capital firms, or small-business investment companies (SBICs). The most important source of financing for a small business is the owner's personal resources.Bank loans are a second source of financing. Venture capital firms invest money in a business in return for stock. These firms are groups of small investors seeking to make profits on companies with rapid growth potential. SBICs take a more balanced approach in their choices than do venture capital firms. SBICs are federally licensed to borrow money from the SBA to invest in or lend to small businesses. Explanation: Financing for starting up a new business may come from personal resources, bank loans, venture capital firms, or SBICs. Page Ref: 67-68Difficulty: DifficultObjective: 3.3Learning Outcome: Describe the role of small businesses in the economy
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Exploring Economics
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Chapter 21 / Exercise 2
Exploring Economics
Sexton
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Skill: Concept109) Discuss the advantages and disadvantages of corporations. Answer: The advantages include limited liability, continuity, and the ability to raise money. Among the disadvantages are transferring ownership such as through a tender offer, higher start-up costs, and double taxation.Explanation: The biggest advantage of incorporation is limited liability: Investor liabilityis limited to personal investment (through stock ownership) in the corporation. The biggest disadvantage of incorporation is double taxation.Page Ref: 75Difficulty: DifficultAACSB: Reflective thinking skillsObjective: 3.6Learning Outcome: Describe the role of small businesses in the economySkill: Concept110) Describe the three distinct bodies of corporate governance that are specified in a corporation's bylaws. Answer: Stockholders are the owners of a corporation who buy shares of ownership. Theboard of directors is a group of people elected by stockholders to oversee the management of the corporation. Corporate officers are top managers hired by the board torun the corporation on a day-to-day basis. Explanation: Corporate governance covers the roles of shareholders, directors, and other managers in corporate decision making and accountability.Page Ref: 77Difficulty: DifficultObjective: 3.6Learning Outcome: Describe the role of small businesses in the economySkill: Concept
111) Explain entrepreneurship and describe key entrepreneurial characteristics. Answer: Entrepreneurs are people who assume the risk of business ownership. Entrepreneurship is the process of seeking business opportunities under conditions of risk. Some entrepreneurs have a goal of independence and financial security, whereas others want to launch a new venture that can be grown into a large business. Most successful entrepreneurs are resourceful and concerned for customer relations. They have

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