1. Distinguish between unsecured and secured credit. (2 points)
2. Define and distinguish between surety and guaranty arrangements. (2 points)
3. Describe a Chapter 7 liquidation bankruptcy and a Chapter 13 consumer debt adjustment bankruptcy. (5 points)
4. Describe how a business is reorganized in a Chapter 11 bankruptcy. (4 points)
1. (a) Define a sole proprietorship. (b) Describe the liability of a sole proprietor. (2 points)
2. Mr. Deli wants to start a small sandwich shop in his neighborhood. He has enormous amounts of cash that he inherited from his Uncle Walt, so there are no problems with financing the costs of the business.
What is the best type of business for Mr. Deli to form? (1 point)
What are the drawbacks of doing business in that format? (1 point)
3. What is the basic difference between a general partnership and a limited partnership? (2 points)
4. What are the rules for establishing an LLC? (2 points)
5. What is the primary advantage of an LLC over a sole proprietorship or general partnership.
1. List the four (4) major characteristics of a corporation. (4 points)
2. Describe the process of forming a corporation. (5 points)
3. Sue and Peggy have a successful incorporated business. They have a chain of high-end food stores in their region of the country. As they’ve grown, they have expanded the number of chairholders, taken the company public, and introduced a functioning board of directors. One of the directors, Philip, knew that Peggy and Sue were trying to exclusively carry a new brand of fancy peanut butter that was all the rage. He negotiated on the side with the makers to carry the brand in his stores, cutting Sue and Peggy out of the market.
What did Philip do? (2 points)
Who are the possible plaintiffs in a suit against him? (2 points)