Week 1 1Ch 1 2 23

Apuntes

Week 1 (Ch 1 + 2) CHAPTER 1 - THE CORPORATION AND FINANCIAL MARKETS 1.1 The Four Types of Firms Sole proprietorship: a business owned and run by one person. Some characteristics include - Easy to set up - No separation between the firm and the owner - The owner has unlimited personal liability → you pay for the debts - The life of the business is limited to the life of the owner Partnership: identical to a sole proprietorship, but with more than one owner. Some characteristics include - All partners are liable for the firm’s debt → a lender can require any partner to repay all the firm’s outstanding debts - The partnership ends on the death or withdrawal of any single partner - Unlimited liability → there is no separation between the owners and the firm Limited partnership: a partnership with two types of owners: - General partners: have the same rights as privileges as partners and are personally liable for the firm’s debt obligations ➔ Carry responsibility and have decision power - Limited partners: have limited liability Limited liability companies (LLC): limited partnership without a general partner - All members have limited liability and can be involved...