1-3. What is the relationship between financial decision making and risk and return? Would all financial managers view risk-return trade-offs similarly? 1-4. What is the agency problem, and how might it impact the goal of maximization of shareholder wealth? 1-5. Define (a) sole proprietorship, (b) partnership, and (c) corporation. 1-6. Identify the primary characteristics of each form of legal business organization. 1-7. Using the following criteria, specify the legal form of business that is favored: (a) organizational requirements and costs, (b) liability of the owners, (c) the continuity of the business, (d) the transferability of ownership, (e) management control and regulations, (f) the ability to raise capital, and (g) income taxes.