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Chapter 01 Introduction to Corporate Finance




Question;64.;Assume for a;moment that the stockholders in a corporation have unlimited liability for;corporate debts. If so, what impact would this have on the functioning of;primary and secondary markets for common stock?;65.;Suppose you;own 100 shares of IBM stock which you intend to sell today. Since you will;sell it in the secondary market, IBM will receive no direct cash flows as a;consequence of your sale. Why, then, should IBM's management care about the;price you get for your shares?;66.;One thing;lenders sometimes require when loaning money to a small corporation is an;assignment of the common stock as collateral on the loan. Then, if the;business fails to repay its loan, the ownership of the stock certificates can;be transferred directly to the lender. Why might a lender want such an;assignment? What advantage of the corporate form of organization comes into;play here?;67.;Why might a;corporation wish to list its shares on a national exchange such as the NYSE;as opposed to a regional exchange or NASDAQ?


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