Questions and problems

Foundations of Finance

  1. List the advantages and disadvantages of the following forms of business:
    1. Sole proprietorship
    2. Partnership
    3. Corporation
  2. List and briefly describe the advantages of a limited liability company form of business relative to the corporate form of business.
  3. Explain the difference, if any, between accounting profit and economic profit.
  4. What is the goal of the firm and how does it relate to a company's profit?
  5. List and briefly describe three compensation devices that may be used to provide incentives for managers to maximize owners' wealth.
  6. What is the role of Sarbanes-Oxley in corporate governance?