Question

true or false

‏____ 9. Recently, Hale Corporation announced the sale of 2.5 million newly issued shares of its stock at a price of $21 per share. Hale sold the stock to an investment banker, who in turn sold it to individual and institutional investors. This is a primary market transaction.

‏____ 10. One of the functions of NYSE specialists is to facilitate trading by keeping an inventory of shares of the stocks in which they specialize, buying when investors want to sell and selling when they want to buy. They change the bid and ask prices of the securities so as to keep supply and demand in balance.

‏____ 11. The disadvantages associated with a proprietorship are similar to those under a partnership. One exception relates to the more formal nature of the partnership agreement and the commitment of all partners' personal assets. As a result, partnerships do not have difficulty raising large amounts of capital.

‏____ 12. The facts that a proprietorship, as a business, pays no corporate income tax, and that it is easily and inexpensivel

Answer 1

9. False, In primary transaction corporation directly issue the shares to individual or institutional investor.

10. False, NYSE can't change the bid-ask prices of securities. It's changed by market demand and supply.

11. True, As compared to proprietorship, partnership is able to raise fund easily due to agreement and commitment of all partners personal assets. Partners are liable for jointly and severely.

12. True, Sole proprietorships are not considered tax entities separate from their owners. Hence no need to pay corporate income tax as a sole proprietorship.