Question 1: Define each of the following terms:

• Proprietorship, partnership, corporation
• Limited partnership, limited liability partnership, Professional Corporation
• Stockholder wealth maximization
• Money market, capital market, primary market, secondary market
• Private markets, public markets, derivatives
• Investment banker, financial services corporation, financial intermediary
• Mutual fund, money market fund
• Physical location exchanges, computer/telephone network
• Open outery auction, dealer market, electronic communications network (ECN)
• Production opportunities, time preferences for consumption
• Foreign trade deficit

Question 2: What are the three principal forms of business organization? What are the advantages and disadvantages of each?

Question 3: What is a firm's fundamental, or intrinsic, value? What might cause a firm's intrinsic value to be different than its actual market value?

Question 4: Edmund Enterprises recently made a large investment to upgrade its technology, although these improvements won't have much of an impact on performance in the short run, they are expected to reduce future costs significantly. What impact will this investment have on Edmund Enterprises' earnings per share this year? What impact might this investment have on the company's intrinsic value and stock price?    

Question 5: Describe the different ways in which capital can be transferred from suppliers of capital to those who are demanding capital.

Question 6: What are financial intermediaries, and what economic functions do they perform?

Question 7: Is an initial public offering an example of a primary or a secondary market transaction?

Question 8: Differentiate between dealer markets and stock markets that have a physical location.

Question 9: Identify and briefly compare the two leading stock exchanges in the United States today.