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Finance (Subject) / Chapter 1 (Lesson)

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  • Which types of Corporations exist in the US? - sole proprietorship - partnership - limited liability company (LLC) - corporation
  • Which types of corporation exist in Germany? - Einzelfirma - OHG - KG - GmbH - AG - Kommanditgesellschaft auf Aktien (KGaA) - societas Europea (S.E.)
  • Who are the key financial decision makers? - individuals (households) - firms  - government entities 
  • Analysis of financial decision making of firms requires knowledge about? 1. financial structure 2. decision making powers within firma 3. incentives of decision makers ⇒ all three depend on legal form
  • What is important in terms of the legal form? ownership ≠ who has control over assets ⇒ conflict of interest
  • Who owns and runs a Sole Proprietorship? One Person
  • What are some characteristics of a Sole Proprietorship? - owned and run by one person - easy to set up - no separation btw. firm and its owner- unlimited liability for firm's debt- firm dies with its owner- almost identical to Einzelfirma- all sorts of businesses, typically small - firm can raise equity only from owner ⇒ limitedoften: owner changes legal form in order to benefit from limited liability
  • what are the characteristics of a partnership? - more than one owner- all liable for debt- ends if one partner dies ⇒ often lawfirm, doctors, accounting firms
  • what are the characteristics of a limited partnership? - like KG- 2 Types of partners (Komplementäre; Kommanditisten)- used by private equity funds and venture capitalist 
  • What are the characteristic of a limited liability company (LLC)? - limited liability for all owners- all owners can run firm- close to GmbH⇒ but: LLC is not a judicial person
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  • What are the characteristics of a corporation? - separate from owner - is judicial oerson- responsible for obligations  ⇒ owners not responsible → limited liability- ownership divided into stocks  -> ähnlich wie Aktiengesellschaft (AG)
  • How is a corporation taxed? taxed independently of owner⇒ exception: S-corporation

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