Question 1: What are some problems involved in the use of profit maximization as the goal of the firm? How does the goal of maximization of shareholder wealth deal with those problems?
Question 2: Using the following criteria, specify the legal form of business that is favored:
A-organizational requirements and costs.
B-liability of the owners
C-continuity of business
D-transferability of ownership
E-management control and regulations
F-ability to raise capital
G-income taxes.
(Some of the key terms in this chapter were corporation, general partnership, limited partnership, partnership, sole proprietorship, s-type corporation.)
Which of the popular theories of the term structure of interest rates do you find most convincing? Why? What would be the advantages of your organization obtaining funding via private placement?