Financial Policy Definition Essay
11 March 2011
Question 1-2; (1-1.a.b.)
Proprietorship: is the entity owned by an individual who is only founder and manager of the company. Even though it does not pay tax for located states, proprietorship’s profits or loses reports on its owners’ annual tax reports. Despite the fact that proprietorship is easy to form and has seldom government regulations, its term of operation is directly depending on its founder life time (Ehrhardt and Brigham 5).
In addition on proprietorship, a partnership is more flexible type which is a business relationship between several individuals who are similar desires to obtain the profits from the partnership’s operation. …show more content…
(I) Open Outcry Auction: is a trading process of selling and buying stocks by offering bids and then sell it higher prices. In other words it is the mechanism of the trades.
Dealer markets: is different from the auction since in which brokers acting a main role of the trading process, and they ask and quote the prices in order to match the seller or buyer with their prices (Ehrhardt and Brigham 30).
Electronic communication network: is the automatic system which helps for members to match their bid to another buyer or seller. It provides people in any every counties opportunity to participate in trading by using internet (Ehrhardt and Brigham 30).
(J) Production opportunities: is the possibility to convert a capital into profits. Because production opportunities affect the returned earnings of the investment, financiers consider it when they determining the cost of money (Ehrhardt and Brigham 21).
Time references for consumption: is the tendency of the use of money in present and future. In spite the fact that in China people tend to save their money for future, Mongolian people prefer to use their money presents (Ehrhardt and Brigham 20). (K) Foreign trade deficit: is the one of the economic condition which affects the cost of money. For example, if American foreign trade getting slows, its reserve of