5. Stocks & Shares• Scan the article on page 91 to answer the
questions in 1B
ANSWERS:
1. Because a non-incorporated business (i.e. one that
is not a company) has unlimited liability for debts. If
it owes money, the people involved in it are not
protected from bankruptcy and can lose their
personal possessions. A company provides legal
protection and limited liability.
2. In order to raise capital, generally to expand the
business.
3. Shares give their holders part of the ownership of a
company. Shareholders receive a proportion of a
company’s profits as a dividend, and may be able to
make a capital gain by selling their shares at a
higher price than they paid for them.
6. Bonds
Do exercise 2B, 2C in groups
ANSWERS
2b
1. C (see first paragraph)
2. C (if interest rates have gone up, bondholders may get less than
they jpaid for a bond, and if a company seems to be going bankrupt,
no one will buy their bonds at any price, hence ‘try to get their
money back’)
3. B (see 3rd paragraph)
4. C (see 4th paragraph. A is false because the advantage of bonds
over bank loans is not a fiscal advantage, but a matter of borrowing
costs)
5. B (see final paragraph)
8. SHOW ME THE MONEY!
• bankers vs. small business owners
• only one loan to give
• think of a product/service and
prepare facts/figures about costs,
sales projections, profit margins,
repayment periods, existing
competitors, new competitors,
etc.
• the bankers will decide who to
give the loan to (and
professionalism points!)
