Finance 3321 CFIN 6 Chapter One Study Guide || All Answers Are Correct 100%.

Financial Markets and institutions: correct answers banks, insurance companies, savings and loans, and credit unions. The success of these organizations requires an understanding of factors that cause interest rates and other returns in the financial markets to rise and fall. Investments correct answers Focuses on decisions made by businesses and individuals as they choose securities for their investments portfolios. Financial Services: correct answers Refer to functions provided by organizations that deal with the management of money. Includes banks, insurance companies, brokerage firms and similar companies. Those who work here help individuals and companies determine how to invest money to achieve goals such as home purchase, retirement, financial stability and sustainability. Managerial (business) finance correct answers deals with decisions that all firms make concerning their cash flows including both inflows and outflows. As a consequence, it is important in all types of businesses, whether they are public or private, and whether they deal with financial services or the manufacturer of products. Proprietorships advantages correct answers -It is easily formed and inexpensive, only requiring a license from the state and municipality (governing body) in which the business operates are needed. -Has a few government regulations. -Is taxed like an individual and not a corporation, which is taxed double; thus, earnings are taxed only once. Proprietorship disadvantages correct answers -Has unlimited personal liability which means the owner can lose everything. Any debt of the business is considered an obligation of the sole owner. They are at risk of losing personal assets as well as assets outside the business. Thus losses can far exceed the money they have invested in the company. -Life is limited to the time the individual who created it owns the business. This means if a new owner takes over they become the new proprietorships even if the name does not change. -Transferring ownership is somewhat difficult. Disposing of a business is similar to selling a used house. They must negotiate with buyers which can take weeks or months. -It is difficult for this form of business to obtain large sums of capital because the first financial strength generally is based solely on the financial strength of the only owner. It can affect the credit of owners and their access to bank loans, and loans from relatives and friends. Proprietorship can NOT raise funds by issuing stocks and bonds to investors. Proprietorship correct answers A business owned by one individual. 75% of businesses operate on this form of business Partnership correct answers Similar to proprietorship, except it has two or more owners. 9-12 % operate on this form of business