When a corporation's shares are owned by a few individuals?
When a corporation's shares are owned by a few individuals, we say that the firm is "closely, or privately, held." b. "Going public" establishes a firm's true intrinsic value and ensures that a liquid market will always exist for the firm's shares. c.
What must be true for a stock to be in equilibrium?
For a stock to be in equilibrium, its intrinsic value must be greater than the actual market price. c. Conflicts can exist between stockholders and managers, but potential conflicts are reduced by the possibility of hostile takeovers. Which of the following statements is CORRECT? a.
How should a firm's stockholders and bondholders react to its investments?
There is no good reason to expect a firm's stockholders and bondholders to react differently to the types of assets in which it invests. d. Stockholders should generally be happier than bondholders to have managers invest in risky projects with high potential returns as opposed to safe projects with lower expected returns.
How does the company change the way executive stock options are handled?
The company changes the way executive stock options are handled, with all options vesting after 2 years rather than having 20% of the options awarded vest every 2 years over a 10-year period. d. The company's outside auditing firm is given a lucrative year-by-year consulting contract with the company.
Which of the following describes a merger?
Which of the following best describes a merger? It occurs when two firms voluntarily decide to combine their companies.
Which of the following is an advantage of an acquisition?
Which of the following is an advantage of acquisitions? They are quick to execute and help firms to rapidly build their presence in the target foreign market.
When the management and board of directors of a firm targeted for acquisition disapprove of a merger this is known as a?
hostile takeoverGlossaryhostile takeovera situation in which the management and board of directors of a firm targeted for acquisition disapprove of the mergerjoint venturean agreement between two or more groups to form a business entity in order to achieve a specific goal or to operate for a specific period of time31 more rows
Which of the following is an advantage of the corporate form of organization?
What are the advantages of forming a corporation? There are several advantages to becoming a corporation, including the limited personal liability, easy transfer of ownership, business continuity, better access to capital and (depending on the corporation structure) occasional tax benefits.
When a company buys another company what happens to your stock?
If the buyout is an all-cash deal, shares of your stock will disappear from your portfolio at some point following the deal's official closing date and be replaced by the cash value of the shares specified in the buyout. If it is an all-stock deal, the shares will be replaced by shares of the company doing the buying.
What does acquisition mean?
Definition of acquisition 1 : the act of acquiring something acquisition of property the acquisition of knowledge. 2 : something or someone acquired or gained The team announced two new acquisitions.
When one corporation buys all the shares of another corporation What is the effect as a general rule?
When a corporation acquires all or substantially all of the assets (as opposed to stock) of another corporation by direct purchase, the purchasing (or acquiring) corporation simply extends its ownership and control over the additional assets. (iv) the sale is fraudulently executed in an effort to avoid liability.
What is stock acquisition?
An acquisition is when one company purchases most or all of another company's shares to gain control of that company. Purchasing more than 50% of a target firm's stock and other assets allows the acquirer to make decisions about the newly acquired assets without the approval of the company's other shareholders.
What is merger and consolidation?
During a merger, essentially other corporate entities become a part of an existing entity. This can be useful for smaller companies merging into larger companies that have greater brand recognition and market traction. Conversely, a consolidation is when multiple companies join to form a new entity.
When a corporation purchases shares of its own stock it is called?
Preferred stock. Corporations purchase and hold their own stock, known as treasury stock, for several reasons. Identify which of the following is not a reason that a corporation would buy treasury stock. To reduce the market value of the common shares outstanding. On May 25, Tyler, Inc.
What are corporate shareholders?
A corporate shareholder is a business entity that owns shares in another limited company. The term 'corporate shareholder' may refer to another limited company, a limited liability partnership or a non-profit organisation or charity.
What is corporate form of organization?
A corporation is a business organization that is considered a separate entity from its owners, who are called shareholders. Tom and Tim will form a corporation by filing articles of incorporation with the secretary of state for the state in which they want to form the corporation.
What is leveraged buyout?
In a leveraged buyout, employees, managers, or investors finance the purchase of the company by
Who is needed to do complex filings?
a) lawyers and accountants are needed to do the complex filings
What is the top management team at Sierra Infusion concerned about?
The top management team at Sierra Infusion is concerned about the declining performance of firms in their industry. The team members are becoming concerned about the security of their jobs at Sierra Infusion. At a meeting over dinner, the top management team agrees to go to the board of directors with a proposal for
Does "b" have a direct effect on firm performance?
b. may not have a direct effect on firm performance.
Which ratio measures the efficiency of a firm's collection policy?
A. One ratio that measures the efficiency of a firm's collection policy is day's sales outstanding
What is leverage in finance?
Financial leverage refers to the use of preferred stock in a firm's capital structure.
What is asset turnover ratio?
A. Asset turnover ratio measures the dollar amount of sales per dollar of assets that the firm has
How to form a comparison group?
While doing an industry group analysis, you form the comparison group by choosing firms that are larger than the firm being compared.
How can a company improve its liquidity?
A company can improve its liquidity by increasing its accounts payable, while maintaining the other accounts constant.
Is leveraged risky?
A. A leveraged firm is less risky than a firm that is not leveraged
Is a leveraged firm riskier than a firm that is not leveraged?
D. A leveraged firm is riskier than a firm that is not leveraged
Which type of corporation generally find it easier to raise large amounts of capital?
e. Corporations generally find it easier to raise large amounts of capital.
What are the advantages of forming a corporation?
One advantage of forming a corporation is that equity investors are usually exposed to less liability than they would be in a partnership. b . Corporations face fewer regulations than proprietorships. c.
Why are corporations and partnerships more valuable than proprietorships?
Corporations and partnerships have an advantage over proprietorships because a proprietor is exposed to unlimited liability, but the liability of all investors in the other types of businesses is more limited. e. For a stock to be in equilibrium, its intrinsic value must be greater than the actual market price.
What is the liability of corporate shareholders?
d. Corporate shareholders are exposed to unlimited liability , but this factor is offset by the tax advantages of incorporation.
What does IPO mean in stock market?
The term "IPO" stands for Introductory Price Offered, and it is the price at which shares of a new company are offered to the public. b. IPO prices are generally established by the market, and buyers of the new stock must pay the price that prevails at the close of trading on the day the stock is offered to the public.
What is a corporation?
A corporation is a legal entity created by a state, and it has a life and existence that is separate from the lives and existence of its owners and managers. c. Unlimited liability and limited life are two key advantages of the corporate form over other forms of business organization. d.
Which type of business has fewer regulations?
a. Corporations generally face fewer regulations than proprietorships.
What is the legal document that the creators of a corporation must file with the appropriate state office?
the legal documents that the creators of a corporation must file with the appropriate state office. sole proprietors can leave their business to their heirs. this is called: leaving a legacy. a comprehensive benefit plan may add up to 30 percent or more to a worker's salary. when working for a company.
What is a corporation?
corporation. a chartered legal entity with authority to act and have liability apart from its owners. advantages of sole proprietorship. - ease of starting and ending business. - being your own boss. - pride of ownership. - leaving a legacy. - retention of company profits. - no special taxes.
What is a partnership in business?
a partnership in which all owners share in operating the business and in assuming liability for the business's debts. in a general partnership, no matter who creates the debt, all are liable for losses, lawsuits, or bankruptcy. all partners may lose their investments as well as personal assets. limited partnership.
What is a franchise agreement?
franchise agreement. an agreement whereby someone with a good idea for a business sells the rights to use the business name and sell a product or service to others in a given territory. the failure rate for franchises has been lower than that of other business ventures. franchisor.
What is cooperative business?
cooperative. a business owned and controlled by the people who use it--producers, consumers, or workers with similar needs who pool their resources for mutual gain. having members work a certain number of hours or electing a board of directors that hires professional management are two ways a cooperative is managed. ex: farm cooperative.
What is a partnership that looks like a corporation?
a partnership that looks much like a corporation (in that it acts like a corporation and is traded on a stock exchange) but is taxed like a partnership and thus avoids the corporate income tax. attributes: - traded on the stock exchange. - taxed like a partnership. - acts like a corporation.
How many shareholders can a family have?
to qualify: - have no more than 100 shareholders (all members of a family count as one shareholder) - have shareholders that are individuals individuals or estates, and who (as individuals) are citizens or permanent residents of the US. - have only one class of stock.