Chapter 4

Question 1

Legal documents that set forth the basic agreement between partners.

Answer 1

articles of partnership

Question 2

A group of individuals, elected by stockholders to oversee the general operation of a corporation, who set the corporation’s long-range objectives.

Answer 2

board of directors

Question 3

Stock whose owners have voting rights in the corporation, yet do not receive preferential treatment regarding dividends.

Answer 3

Common stock

Question 4

An organization composed of individuals or small businesses that have banded together to reap the benefits of belonging to a larger organization.

Answer 4

cooperative (co-op)

Question 5

A legal document that the state issues to a company based on information the company provides in the articles of incorporation.

Answer 5

corporate charter

Question 6

A legal entity created by the state, whose assets and liabilities are separate from its owners.

Answer 6

corporation

Question 7

Profits of a corporation that are distributed in the form of cash payments to stockholders.

Answer 7

dividends

Question 8

A partnership that involves a complete sharing in both the management and the liability of the business.

Answer 8

general partnership

Question 9

The process of becoming a public corporation by selling stock so that it can be traded in public markets.

Answer 9

initial public offering (IPO)

Question 10

A partnership established for a specific project or for a limited time.

Answer 10

joint venture

Question 11

A purchase in which a group of investors borrows money from banks and other institutions to acquire a company (or a division of one), using the assets of the purchased company to guarantee repayment of the loan.

Answer 11

Leveraged buyout (LBO)

Question 12

Form of ownership that provides limited liability and taxation like a partnership but places fewer restrictions on members.

Answer 12

limited liability company

Question 13

A business organization that has at least one general partner, who assumes unlimited liability, and at least one limited partner, whose liability is limited to his or her investment in the business.

Answer 13

limited partnership

Question 14

The combination of two companies (usually corporations) to form a new company.

Answer 14

merger

Question 15

Corporations that focus on providing a service rather than earning a profit but are not owned by a government entity.

Answer 15

nonprofit corporations

Question 16

A form of business organization defined as an association of two or more persons who carry on as co-owners of a business for profit.

Answer 16

partnership

Question 17

A special type of stock whose owners, though not generally having a say in running the company, have a claim to profits before other stockholders do.

Answer 17

preferred stock

Question 18

A corporation owned by just one or a few people who are closely involved in managing the business.

Answer 18

private corporation

Question 19

A corporation whose stock anyone may buy, sell, or trade.

Answer 19

public corporation

Question 20

Corporations owned and operated by federal, state, or local government.

Answer 20

quasi-public corporations

Question 21

A corporation that is taxed as though it were a partnership with restrictions on shareholders.

Answer 21

S corporation

Question 22

Businesses owned and operated by one individual.

Answer 22

sole proprietorships

Question 23

Shares of a corporation that may be bought or sold.

Answer 23

stock

Question 24

The purchase of one company by another, usually by buying its stock.

Answer 24

acquisition