FIN 534 Financial Markets, Corporate Structures, and Investment Transactions

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FIN 534 Financial Markets, Corporate Structures, and InvestmentTransactionsYou recently sold 200 shares of Apple stock to your brother. The transfer was made through a broker, andthe trade occurred on the NYSE. This is an example of:AnswerA futures market transaction.A primary market transaction.A secondary market transaction.A money market transaction.An over-the-counter market transaction.Which of the following statements is CORRECT?AnswerIt is usually easier to transfer ownership in a corporation than it is to transfer ownership in asole proprietorship.Corporate shareholders are exposed to unlimited liability.Corporations generally face fewer regulations than sole proprietorships.Corporate shareholders are exposed to unlimited liability, and this factor may be compounded by thetax disadvantages of incorporation.Shareholders in a regular corporation (not an S corporation) pay higher taxes than owners of anotherwise identical proprietorship.Which of the following statements is CORRECT?AnswerOne of the disadvantages of a sole proprietorship is that the proprietor is exposed to unlimitedliability.It is generally easier to transfer one's ownership interest in a partnership than in a corporation.One of the advantages of the corporate form of organization is that it avoids double taxation.One of the advantages of a corporation from a social standpoint is that every stockholder has equalvoting rights, i.e., "one person, one vote."Corporations of all types are subject to the corporate income tax.Cheers Inc. operates as a partnership. Now the partners have decided to convert the business into a regularcorporation. Which of the following statements is CORRECT?AnswerAssuming Cheers is profitable, less of its income will be subject to federal income taxes.Cheers will now be subject to fewer regulations.Cheers' shareholders (the ex-partners) will now be exposed to less liability.Cheers' investors will be exposed to less liability, but theywill find it more difficult to transfer theirownership.Cheers will find it more difficult to raise additional capital.

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