Introduction to Finance

The Financial Management Decision Process.

What are the three types of financial management decisions? For each type of a decision, give an example of a business transaction that would be relevant.

Sole Proprietorships and Partnerships.
What are the four primary disadvantages to the sole proprietorship and partnership forms of business organization? What benefits are there to these types of business organizations as opposed to the corporate form?

Corporations.
What is the primary disadvantage of the corporate form of organization? Name at least two of the advantages of a corporate organization.

Agency Problems.
Who owns a corporation? Describe the process whereby the owners control the firm's management. What is the main reason that an agency relationship exists in the corporate form of organization? In this context, what kinds of problems can arise?