How are risk and return related, both in theory and in practice?
How does the position of a limited company compare with that of a human person regarding liability for commercial debts?
How does the position of a shareholder in a limited company differ from that of a sole trader?
‘Preference shares and loan notes are much the same.’ Is this statement correct?
What factors seem likely to explain the popularity of the limited liability company as the legal form of so many UK businesses?
Why are many investment and financing decisions of particular importance to the business?
A business has £1 million at its disposal and managers feel that this could either be invested in new production facilities or be paid to shareholders as a dividend. What does the separation theorem suggest that the business should do? Can the business both pay the dividend and make the investment? Explain.
Explain why, according to the separation theorem, the financing method (equity or loan) does not affect shareholders’ wealth.
Is exploitation of customers by a monopoly supplier, who charges very high prices, consistent with the objective of maximising shareholders’ wealth? Explain your response.
When making a decision, an item of information needs to satisfy two criteria in order to be relevant and worthy of taking into account. What are these two criteria?