Assignment 01 Essay

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Assignment 01 BU340 Managerial Finance I Directions: Be sure to make an electronic copy of your answer before submitting it to Ashworth College for grading. Unless otherwise stated, answer in complete sentences, and be sure to use correct English spelling and grammar. Sources must be cited in APA format. Your response should be a minimum of one (1) single-spaced page to a maximum of two (2) pages in length; refer to the "Assignment Format" page for specific format requirements. 1. What form of partnership allows some of the investors to limit their liability? Explain by giving examples. (25 points) The type of partnership which allows some of the investors to limit their liability is a limited partnership. Many limited partnerships can be found in the real estate business where lawyers, CPA’s, and doctors are the limited partners. Their liabilities are completely limited and they cannot be active in the firm’s management as well. Only the realtor is the general partner, who assumes the unlimited liability and the power of the decision making process. 2. When does insider trading occur? What government agency is responsible for protecting against the unethical practice of insider trading? Explain by giving examples. (25 points) Insider trading occurs when someone within a firm has knowledge of information and uses it to his or her advantage before the information is made public. The Securities and Exchange Commission is responsible for protecting against the unethical practice of insider trading. One popular example of insider trading is when a CEO of a company sells stock after having knowing that the company will lose a major contract which can have a negative effect on the stock price. 3. Explain how the tax code allows depreciation to contribute to cash flow. (25 points) The Federal Tax Code allows depreciation to

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