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read the following scenario and answer the question in 5–10 sentences.
Mike Derrick and Juan Nunez currently run a small general contractor business that performs miscellaneous services, such as shoveling snow and fixing broken signs, for strip malls. Mike is a nonresident alien of Canada, so the pair has always been concerned about officially forming a company. Juan's sister, Rebecca, has deep pockets and sees the potential in Juan and Mike's operation. She approached Juan and Mike about investing in the company. Rebecca has great connections with major retailers and tells the two that she can ensure they receive large contracts if they incorporate. Additionally, she will team up with them to provide a large amount of startup capital in return for guaranteed
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- SECTION D Read the following extract and then answer the question belowA client is interested in setting up a business and does not know which form of business to use. He has been told that he can form a sole proprietorship, or partnership, or a limited liability company. He comes seeking for business advises on the advantages and disadvantages of a registered company. Make a comparison between a sole proprietorship, partnership, and a limited liability company.arrow_forwardFreida, who lives in Covington, Louisiana purchased three bonds from a company based in Brazil that were yielding 9.75% and paid a 12% coupon, semi-annually. The company went bankrupt and Freida never received her money. What type of risk caused Freida's loss? Interest rate risk. Default risk. Exchange rate risk. Executive risk.arrow_forwardCompanies A and B differ only in their capital structure. A is financed 30% debt and 70% equity: B is financed 10% debt and 90% equity. The debt of both companies is risk-free. a. Rosencrantz owns 1% of the common stock of A. What other investment package would produce identical cash flow for Rosencrantz? b. Guildenstern owns 2% of common stock of B. What other investment package would produce identical cash flows for Guildenstern?arrow_forward
- James Stilton is the cief executive oiffcer (CEO) of Rightsliving. inc Company that buys life insurance policies at discount from terminally ill people and sells the policies to investors RightLiving pays the terminally ill pateitns a percentage of the future death benefits and then sells the policies to investors for 85% of the value of the future beneffits. The patients receive the cash to use for medical and other expenses and the investotors are gauranteed a postitive return on thier investment. The diffreence beteween the purchase and sale price is the RightLiving profit. Stilton is aware that some sick patiente may obtain insurance policies through fraud (by not revealing thier illness on the insurance app). An insurance company that discovers such fraud will cancel the policy and refuse to pay. Stilton believes that most of the policies he has purchases are legitimate but he knows that some are probably not. Question Under the categorical imperative, are the actions of…arrow_forwardShort answer is absolutely fine: Does an ancient redwood forest have value other than its economic one as potential lumber? If so, what is this value, and how is it to be weighed against the interests of a company like Maxxam? Are redwoods more important than jobs? Is it morally permissible for private owners to do as they wish with the timberland they own? Explain why or why not. What’s your assessment of Hurwitz? Is he a robber baron, a socially responsible businessperson, or something in between?arrow_forwardWhat is one of the primary roles that agency law plays in partnerships? Group of answer choices: A. Controls formation of the entity. B. Dictate how the partners can operate the business. C. Whether or not a partner can bind the partnership to obligations or liabilities. D. Dictates what the operating agreement must state..arrow_forward
- Sandy works for RigorMart. She supervises regional managers and directs them based on orders from the board of directors. Sandy’s position also entitles her to stock ownership in the company. What is Sandy’s position in the company? Executive and shareholder Executive, shareholder, and director Executive Shareholderarrow_forwardWillams and Nick are childhood friends. Nick had lost his right hand in an accident in childhood. They meet after a long time in a restaurant. On being asked, Nick tells Willams that he feels very discontented in managing his family business after the death of his father as it doesn't match his areas of interest. Willams knows that Nick possesses extraordinary skills in management although he hasn't acquired any professional degree in management. Therefore, he asks Nick to wind up his business in India and join him in his hotel business in Dubai as an Assistant Manager in the Sales and Marketing Division. In the context of the above case: 1. Can Nick be deployed to the post of Assistant Manager in the Sales and Marketing Division though he hasn't acquired any professional degree in management? Explain by giving suitable justifications in support of your answer. 2. List any two values that are reflected in this act of Willams.arrow_forwardMarcia bought a home. She paid $475,000. Her loan amount was $380,000. Calculate her LTV ratio. 85% 92% 77% 80% harrow_forward
- Read and analyze the following situation.Bernard J. Ebbers, chief executive officer and founder of the telecommunications giant, WorldCom, owed the corporation $375 million for a loan secured by shares he owned in the company. The value of the company's stock was declining, to the point that the value of its shares was less than the amount of the loan. On February 2, 2002, Mr. Ebbers engaged in a series of communications with leading Wall Street stock analysts, whose opinions helped drive up the stock price, to refute negative news about the company's financial condition. , which was frightening investors. That day, the company's shares increased by 12% in value. Four months later, the company filed for bankruptcy protection due to its precarious economic condition. Answer the following questions:Are the actions mentioned above illegal? Are they unethical? Support and explain your answer. What is the difference between an illegal action and an unethical one? Support and explain your…arrow_forwardDaniel Hudson has been approached by a larger software company that is interested in possibly acquiring eHarbour. Daniel Hudson and the other partners of eHarbour are somewhat excited about this possible acquisition, but the owners are also worried about protecting company trade secrets and losing control over the company. What can be done to protect company trade secrets and proprietary company information as the larger software company explores whether to acquire eHarbour? What can be done to keep this potential acquisition from being publicized? Discuss what is meant by due diligence with mergers and acquisitions. What are the potential advantages and disadvantages of company acquisition for: (1) the owners; (2) the employees; and (3) the customers?arrow_forwardPresented below are different cases relating to various investors. Discuss and justify whether each investor has the power to direct the relevant activities of its respective investee. You may assume. unless otherwise stated. that the voting rights in each investee are used by the investors to elect members onto the investee's board of directors or to direct the relevant activities of the investee. a) Petro acquired 240 (80%) of the ordinary shares of Salt and 160 (40%) of its N class shares. Each ordinary share carries 1/2 voting tight and each N share carries 1 voting right. b) Petunia acquired 40% of the ordinary shares of Sam. Each ordinary share carries 1 voting The remainder of the voting rights in Sam are held by two individuals that are independent of Petunia. c) Polly acquired 20% of the ordinary shares of Sun. A further 60% of the ordinary shares of Sun are owned by Interim (Polly holds 70% of the shares in Intern*. d) Press acquired 20% of the voting rights in Slim. Press is…arrow_forward
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