Q2)

You come across different kinds of businesses every day. The following table describes some businesses. Using the description of each business, classify it as a sole proprietorship, a partnership, a corporation, or a limited liability company/limited liability partnership. Business Scenario Type of Business Anthony started a tutoring website. After a few months, a publishing company filed a lawsuit against his company for copyright infringement. Anthony had to shut down his business and lost all his personal assets in the process. Corporation Sachit and his friend Shirley run a carpet cleaning business and distribute the profits proportionately. LLC/LLP Partnership Rock Inc. is a mineral mining company. The CEO of Rock Inc. recently died. The news led to a short- term decline in the company's stock price, but it bounced back after the company announced its Sole Proprietorship quarterly earnings. Paradigm Media is a company run by a group of new media professionals. The owners of the company do not have any personal liability and file taxes based on individual income. Benjamin Graham, the father of value investing, once said, "In the short run, the market is a voting machine, but in the long run, the market is a weighing machine." In this quote, Benjamin Graham was referring to the key difference between the "price" and the "value" of a security. In November 2006, Citigroup's stock (NYSE: C) was trading at $49.59. Following the credit crisis of 2007-2008 and by the end of October 2009, Citigroup's stock price had plummeted to $4.27. Several banks went under, and others saw their stock prices lose more than 60% of their value. Based on your understanding of stock prices and intrinsic values, which of the following statements is true? A stock's market price is often based on investors' perceived risk in the company. The intrinsic value of a stock is based only on perceived investor returns. Which of the following describe the reason(s) why maximization of intrinsic stock value benefits society? Check all that apply. Workers prefer companies that minimize operating costs. Consumers benefit when companies rise prices beyond reasonable levels. Successful companies attract more talent. The owners of stock are society