A friend who we will call Mary has asked you to join her in setting up a new business venture. Mary has decided that a general partnership would be the most appropriate form of business organization. Mary is very smart and you are pretty sure she will be successful, but you are not sure you can trust her, as she has had some rather shady dealings in her past. In fact, you have heard through the grapevine that Mary stole money from a prior business partner. Which of the following would you be most concerned about? Multiple Choice Mary might incur a bunch of debt buying a fancy new car in the name of the partnership, then skip out of town, leaving you to pay off the debt Mary might want you to become a limited partner to shield you from unlimited liability Mary might want to bring in new partners, thus diluting your interest in the partnership Mary might want to control the management of the partnership, since it is her idea and she does not want you taking credit for her ideas You have a great idea which you want to pursue immediately after graduation. You expect it will be very profitable but due to high expected growth, you will need large amount of capital to make it work. You are now deciding on what form of business organization you should set up. Your three choices are a sole proprietorship, a partnership and a corporation. Based just on what you have been told above, which of the three forms would appear to make the most sense from a risk and return perspective: Multiple Choice Sole proprietorship O Partnership Corporation Agency theory is very prominent in the finance literature. Agency theory deals with the conflict that arises when a principal hires an agent to manage the principal's firm on her behalf. In the case of Merrill Lynch, referenced on Page 19 of the PowerPoint, who is the agent and who is the principal? Multiple Choice Agents are the shareholders of Merrill Lynch: principal is John Thain, CEO of Merrill Lynch Agentis Bank of America, principals the shareholders of Merrill Lynch Agent is Merrill Lynch's auditors, principals are the shareholders of Merrill Lynch Agent is John Thain, CEO of Merrill Lynch; principals are the shareholders of Merrill Lynch