Advantages And Disadvantages

Question 1

Advantages of a business corporation

Answer 1

1. Easier to raise capital
2. Legal capacity to act as a legal unit
3. Has continuity existence (because it does not depend on the lives of those who compose it)
4. Management is centralized in the BOD
5. Credit is strengthened by continuity of existence
6. Creation, organization, dissolution, and management are standardized
7. makes feasible gigantic financial enterprises
8. Shareholders have limited liability
9. Shareholders not a general agent of the business
10. Shares of stock can be transferred without the consent of the other stockholders

Question 2

loan made by an investor to a borrower, typically a company or government. The borrower agrees to pay back the loan with interest at a specific future date.

Answer 2

Bonds

Question 3

refer to debt securities issued by a government, such as a municipality, to finance projects that enhance public safety and peace, like police stations or community safety programs. They are considered low-risk investments backed by the issuing government’s credit.

Answer 3

Peace bonds

Question 4

is when a company sells its shares to the public for the first time. This allows the company to raise money from investors and the public to buy and own a part of the company.

Answer 4

Initial public offering (IPO)

Question 5

Disadvantages of a business corporation

Answer 5

1. Complicated in formation and management
2. High cost of formation and operation
3. Credit is weakened by limited liability of shareholders
4. Ordinarily lack of personal element in transferability of shares
5. Greater degree of governmental control
6. Voting rights has become theoretical (because of proxies and widespread ownership)
7. Stockholders have little voice in the business
8. In large corporations, management and control are separate from ownership