After studying Chapter 2, you should be able to:
- Describe the four basic forms of business organization in the United States and the advantages and disadvantages of each.
- Understand how to find a corporations taxable income and how to determine the corporate tax rate both average and marginal.
- Understand various methods of depreciation.
- Explain why acquiring assets through the use of debt financing offers a tax advantage over both common and preferred stock financing.
- Describe the purpose and makeup of financial markets.
- Demonstrate an understanding of how letter ratings of the major rating agencies help you to judge a securitys default risk.
- Understand what is meant by the term structure of interest rates and relate it to a yield curve.