Chapter 1
Even numbered discussion questions from page 20 & 21
#2What type of partnership allows some of the investors to limit their Liability? Explain.
A limited partnership allows some investors to limit their liability.
With a limited partnership some partners are known as general partners and have unlimited
liability for any debts the company may have. The other partners of the company are called
limited partners. This means they are only responsible for their initial contribution. Usually
the limited partners do not take part in managing the company.
#4What document is necessary to form a corporation?
The document is known as Articles of Incorporation.
#6Why are institutional investors important in today business world?
Institutional investors are very important because they are responsible for making sure
businesses are managed in an efficient and ethical manor.
#8When does insider trading occur? What government agency is responsible for protecting
against the unethical practice of insider trading?
Insider trading occurs when someone has information not available to the public and uses
the information to profit from trading publicly traded securities.
The Securities and Exchange Commission protects against insider trading.
#10What is the difference between a primary and secondary market?
When a corporation raises funds thru the financial market the sale ofsecurities is made in
the primary market. Once the securities are sold they are traded between the investors in
the secondary market. Basically the primary market is open to many investors. The
Secondary market is only for the investors who bought securities in the primary market.
#12What changes can take place under restructuring? In recent times, what group of
investors has often forced restructuring to take place?
