Name__________________ Date due__________date turned in___________
Posted on internet Sunday 03_27
Econ: Chapter: 8 Section: 3 Date Due: 03_28_ Page(s)195
Thru 200 Biography: pg.189 Jerry Yang; Data Bank: 534,535
Graphs Fig.8.1;8.2;8.3;8.4;8.5 Global Connection: pg.203 Skills for
Life:page:194 Fast Fact pg.202 Case study Business and Ethics pg.205
Chapter 8: Business Organizations: Section 3 Corporations, Mergers, and
Multinationals
Objectives: after studying this section you will be able to:
A. Explain the characteristics of corporations.
B. Analyze the advantages of incorporation.
C. Analyze the disadvantages of incorporation.
D. Compare and contrast corporate combinations.
E. Describe the role of multinational corporations.
Main idea: Corporations are complex business organizations that can be
combined to form even larger businesses. Some corporate enterprises span
the globe.
1. What do businesses often rely on to expand operations?__________
2. What is one way that a business can increase investment?_________
Corporations:
3. A large entity owned by individual stockholders, each of whom faces a limited liability for the firm’s debts is called
a___________. The most complex form of business organization is a corporation. TF
4. A certificate of ownership of the Corporation is called _________. If a Corporation issues 1000 shares of stock and you
purchase one share you are part owner of the Corporation. TF
5. Corporations have a legal identity, separate from its owners; legally it is much like a person. TF
6. Corporations unlike the other business structures that we studied pay taxes. TF
7. What percentage of all businesses to corporations account for?__________. What percentage of all products sold are
sold by corporations in this country____________. And how much of the net income earned in this country is generated
by corporations?_____
7. Why do most large business firms incorporate?______ what type of firm is suited to be a
Corporation?________________ what percentage of their income are profits?___________
8. If you start a business, form a Corporation and issue stock to only a few people, that are rarely trade their stock your
Corporation would be an example of__________ _____ _____
9. However if you have many shareholders who buy and sell your stock on the open market such as the New York Stock
Exchange, your Corporation is called a____ ____ _____
10. Who elects the Board of Directors in a publicly held corporation?_______________. The Board of Directors is in
charge of appointing corporate officers who run the Corporation. T F.
Advantages of Incorporation
11. To gain the benefit of limited liability is the major reason to incorporate. TF if you're a shareholder in a Corporation
you will be responsible for the actions of the Corporation. T F. What is the only amount that you can lose if you are
shareholder in a Corporation?_____________ you can transfer your stock to someone else any time you choose. T F
12. How can a Corporation raise money to purchase machinery and equipment?___________
13. A formal contract to repay money with interest at fixed intervals is called a?________
14. To be a stockholder in a firm one must possess many different types of managerial skills. TF
15. Corporations can continue doing business indefinitely. TF
Disadvantages of Incorporation
16. Applications to form a Corporation are not expensive, or time-consuming, nor are they confusing. TF
17. What is the first state license that you must file for if you wish to incorporate?____________
18. Because corporations are like a person, corporations must pay taxes on their income. TF
19. The portion of corporate profits paid to stockholders; so that stockholders can receive income from the Corporation
are called_____________. Once you receive dividends as a stockholder, you must pay personal income tax on those
dividends. T F. However the Corporation does not have to pay tax on those profits that it has paid out as dividends. T F
20. Once you sell your shares, if you have made a profit on those shares, you must pay what kind of tax?____________
what is the dividend and capital gains tax rate?____________ Congress passed this law in 2003 in order to reduce
double taxation. T F
21. Managers, and board of directors, manage corporations not owners, it is possible to own a Corporation and lose
control of it. TF what may managers be more interested in today, rather than making difficult decisions that would
benefit the firm tomorrow?__________
22. The federal agency that regulates the stock market is called the__________ ___________ _________. Corporations
must hold annual meetings, file quarterly and annual reports to the Securities and Exchange Commission. T F
Corporate Combinations
23. How many kinds of mergers are there?_____________24. If two or more firms that compete in the same market, because they have the same good or service decide to merge
what kind of a merge is this_____________. Why did Chrysler and Mercedes-Benz decide to merge? What did they hope
to reduce?____________ did it work? Are they still together?
25. Why would the government watch horizontal mergers very carefully?
26. Two or more firms involved in different stages of producing the same good or service can join together in order to
control all phases of production, rather than rely on outside suppliers, what kind of merger is this?_______
____________- vertical mergers usually lessened competition so they are seldom allowed. T F
27. A firm that buys at least three businesses that makes totally unrelated products, and no one business earns the
majority of the firm's profit, this kind of combination is called_____________. Why does the government allow this kind
of merger?__________Multinational Corporations
28. Corporations that operate in more than one country at a time, usually having headquarters in one country and
branches and other countries are called__________ __________
29. One of the advantages of a multinational corporation or (M N C) is that they only have to pay taxes where they have
their corporate headquarters. T F what is another name for multinational corporations_________ __________ how
much money do M N C,s account for___________- many multinational corporations have budgets that are bigger than
most governments. TF
30. Multinationals spread jobs and new technologies around the globe; they also improve the quality of life of many of
the nations they operate in. TF. On the other hand, wages can be low and working conditions for poor, and sometimes
influence the culture and politics of the country they operate in. TF