Question 1

A common tactic of corporate raiders is to start a proxy fight.

Accepted Answer

A) True 
 B)False

Question 2

Prudential and several other large insurance companies have joined together to underwrite an extremely large insurance policy. This sort of association is referred to as a(n)

Accepted Answer

A)  syndicate. 
B)  cooperative. 
C)  conglomerate. 
D)  alliance. 
E)  vertical merger. 
A)  syndicate. 
B)  cooperative. 
C)  conglomerate. 
D)  alliance. 
E)  vertical merger.

Question 3

What is the significance of the name preferred stock?

Accepted Answer

A)  It is the type of stock that most investors would rather have. 
B)  Its claims on dividends are paid before those of common stock. 
C)  The overall return on preferred stock is higher than that on common stock. 
D)  This stock is available only to select individuals associated with the company. 
E)  This stock provides the most powerful voting rights. 
A)  It is the type of stock that most investors would rather have. 
B)  Its claims on dividends are paid before those of common stock. 
C)  The overall return on preferred stock is higher than that on common stock. 
D)  This stock is available only to select individuals associated with the company. 
E)  This stock provides the most powerful voting rights.

Question 4

Of the three common forms of ownership, a corporation can respond to changes in market conditions more rapidly than others can.

Accepted Answer

A) True 
 B)False

Question 5

The simplest form of business owned and operated by one person is called a(n)

Accepted Answer

A)  franchise. 
B)  partnership. 
C)  S-corporation. 
D)  sole proprietorship. 
E)  syndicate. 
A)  franchise. 
B)  partnership. 
C)  S-corporation. 
D)  sole proprietorship. 
E)  syndicate.

Question 6

Genetech, a biotechnology firm engaging in the new field of genetic engineering, has asked your advice about remaining independent and temporarily gaining access to the marketing and manufacturing expertise it lacks from another firm. You would suggest

Accepted Answer

A)  forming a limited-liability company. 
B)  forming a joint venture. 
C)  forming an S-corporation. 
D)  merging with a company with the necessary expertise. 
E)  starting a cooperative. 
A)  forming a limited-liability company. 
B)  forming a joint venture. 
C)  forming an S-corporation. 
D)  merging with a company with the necessary expertise. 
E)  starting a cooperative.

Question 7

Not-for-profit organizations must meet specific guidelines in order to obtain tax-exempt status. These guidelines are structured by the

Accepted Answer

A)  board of directors. 
B)  U.S. Uniform Partnership Act. 
C)  U.S. Bureau of the Census. 
D)  Chamber of Commerce. 
E)  Internal Revenue Service. 
A)  board of directors. 
B)  U.S. Uniform Partnership Act. 
C)  U.S. Bureau of the Census. 
D)  Chamber of Commerce. 
E)  Internal Revenue Service.

Question 8

In the state in which it is incorporated, a business is known as a(n)

Accepted Answer

A)  S-corporation. 
B)  resident corporation. 
C)  public corporation. 
D)  foreign corporation. 
E)  domestic corporation. 
A)  S-corporation. 
B)  resident corporation. 
C)  public corporation. 
D)  foreign corporation. 
E)  domestic corporation.

Question 9

A hostile takeover is a situation in which

Accepted Answer

A)  the management and board of directors of the targeted firm disapprove of the proposed merger. 
B)  stockholders are paid a golden parachute. 
C)  the targeted firm is dismantled to avoid the merger. 
D)  the government makes the decision that the corporate raider can purchase the targeted firm. 
E)  the corporate raider receives a sum of money to leave the targeted firm alone. 
A)  the management and board of directors of the targeted firm disapprove of the proposed merger. 
B)  stockholders are paid a golden parachute. 
C)  the targeted firm is dismantled to avoid the merger. 
D)  the government makes the decision that the corporate raider can purchase the targeted firm. 
E)  the corporate raider receives a sum of money to leave the targeted firm alone.

Question 10

A limited-liability company is

Accepted Answer

A)  taxed like a corporation. 
B)  taxed like a partnership. 
C)  similar to a cooperative. 
D)  always used to organize charitable organizations. 
E)  the result of a horizontal merger. 
A)  taxed like a corporation. 
B)  taxed like a partnership. 
C)  similar to a cooperative. 
D)  always used to organize charitable organizations. 
E)  the result of a horizontal merger.

Question 11

With respect to combined business skills and knowledge, which of the following partnerships is best?

Accepted Answer

A)  Joe, Louis, and Raul own a bakery. They are able bakers by trade. Each wants to spend all of his time baking items. 
B)  Carolyn, Melvin, and Cindy own a boutique. Carolyn has marketing expertise. Melvin has ten years' experience operating a successful small store, including hiring employees, handling inventory control, buying, and managing credit. Cindy is a CPA. Each has agreed to use his or her experience and expertise for the success of the business. 
C)  Mary and Robert, both young pharmacists, own a pharmacy. Neither has taken a business course, but they are willing to learn. 
D)  Carter and Renée own a video store. Renée is most experienced as a homemaker and mother. Carter has worked as an auto mechanic for ten years. 
E)  Vince and Linda own a vacuum cleaner store. Vince knows everything possible about store operations. Linda is wealthy and can provide investment capital. 
A)  Joe, Louis, and Raul own a bakery. They are able bakers by trade. Each wants to spend all of his time baking items. 
B)  Carolyn, Melvin, and Cindy own a boutique. Carolyn has marketing expertise. Melvin has ten years' experience operating a successful small store, including hiring employees, handling inventory control, buying, and managing credit. Cindy is a CPA. Each has agreed to use his or her experience and expertise for the success of the business. 
C)  Mary and Robert, both young pharmacists, own a pharmacy. Neither has taken a business course, but they are willing to learn. 
D)  Carter and Renée own a video store. Renée is most experienced as a homemaker and mother. Carter has worked as an auto mechanic for ten years. 
E)  Vince and Linda own a vacuum cleaner store. Vince knows everything possible about store operations. Linda is wealthy and can provide investment capital.

Question 12

The order of difficulty and expense, from most to least, when forming a business organization is as follows:

Accepted Answer

A)  corporation, sole proprietorship, partnership. 
B)  corporation, partnership, sole proprietorship. 
C)  partnership, corporation, sole proprietorship. 
D)  partnership, sole proprietorship, partnership. 
E)  sole proprietorship, partnership, corporation. 
A)  corporation, sole proprietorship, partnership. 
B)  corporation, partnership, sole proprietorship. 
C)  partnership, corporation, sole proprietorship. 
D)  partnership, sole proprietorship, partnership. 
E)  sole proprietorship, partnership, corporation.

Question 13

Discuss some of the similarities between not-for-profit corporations and for-profit corporations. What are some of the primary differences?

Accepted Answer

Not-for-profit corporations and for-prof

Question 14

All corporations operate primarily for profit.

Accepted Answer

A) True 
 B)False

Question 15

Unless specified in the charter, a corporation has a

Accepted Answer

A)  legal life of one decade. 
B)  life of seventeen years, which is renewable. 
C)  life of fifty years. 
D)  perpetual life. 
E)  legally recognized life, which varies from state to state. 
A)  legal life of one decade. 
B)  life of seventeen years, which is renewable. 
C)  life of fifty years. 
D)  perpetual life. 
E)  legally recognized life, which varies from state to state.

Question 16

A temporary association organized to perform a specific task requiring a large amount of capital is known as a(n)

Accepted Answer

A)  conglomerate. 
B)  cooperative. 
C)  master limited partnership. 
D)  syndicate. 
E)  authority. 
A)  conglomerate. 
B)  cooperative. 
C)  master limited partnership. 
D)  syndicate. 
E)  authority.

Question 17

A limited-liability company is taxed like a corporation.

Accepted Answer

A) True 
 B)False

Question 18

Describe the advantages and disadvantages of the partnership form of ownership.

Accepted Answer

The partnership form of ownership has se

Question 19

Units of ownership in a master limited partnership (MLP) are often sold on organized security exchanges.

Accepted Answer

A) True 
 B)False

Question 20

When compared to partnerships and corporations, sole proprietorships account for ____ percent of total sales.

Accepted Answer

A)  34 
B)  16 
C)  9 
D)  4 
E)  2 
A)  34 
B)  16 
C)  9 
D)  4 
E)  2

Exam 4: Choosing a Form of Business Ownership

A common tactic of corporate raiders is to start a proxy fight.

Prudential and several other large insurance companies have joined together to underwrite an extremely large insurance policy. This sort of association is referred to as a(n)

What is the significance of the name preferred stock?

Of the three common forms of ownership, a corporation can respond to changes in market conditions more rapidly than others can.

The simplest form of business owned and operated by one person is called a(n)

Genetech, a biotechnology firm engaging in the new field of genetic engineering, has asked your advice about remaining independent and temporarily gaining access to the marketing and manufacturing expertise it lacks from another firm. You would suggest

Not-for-profit organizations must meet specific guidelines in order to obtain tax-exempt status. These guidelines are structured by the

In the state in which it is incorporated, a business is known as a(n)

A hostile takeover is a situation in which

A limited-liability company is

With respect to combined business skills and knowledge, which of the following partnerships is best?

The order of difficulty and expense, from most to least, when forming a business organization is as follows:

Discuss some of the similarities between not-for-profit corporations and for-profit corporations. What are some of the primary differences?

All corporations operate primarily for profit.

Unless specified in the charter, a corporation has a

A temporary association organized to perform a specific task requiring a large amount of capital is known as a(n)

A limited-liability company is taxed like a corporation.

Describe the advantages and disadvantages of the partnership form of ownership.

Units of ownership in a master limited partnership (MLP) are often sold on organized security exchanges.

When compared to partnerships and corporations, sole proprietorships account for ____ percent of total sales.

Exploring the World of Business and Economics

A: Being Ethical and Socially Responsible

B: Being Ethical and Socially Responsible

A: Exploring Global Business

B: Exploring Global Business

Small Business, Entrepreneurship, and Franchises

Understanding the Management Process

Creating a Flexible Organization

Producing Quality Goods and Services

Attracting and Retaining the Best Employees

Motivating and Satisfying Employees and Teams

Enhancing Union-Management Relations

Building Customer Relationships Through Effective Marketing

A: Creating and Pricing Products That Satisfy Customers

B: Creating and Pricing Products That Satisfy Customers

Wholesaling, Retailing, and Physical Distribution

Developing Integrated Marketing Communications

Social Media, E-Business, and Accounting

Using Management and Accounting Information

Understanding Money, Banking, and Credit

Mastering Financial Management

A: Understanding Personal Finances and Investments

B: Understanding Personal Finances and Investments

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