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Three Forms of Business Organizations in the USA

Problem 1
Discuss the three forms of business organization in the United States.

Problem 2
Suppose the real risk-free rate, r*, is 2% and investors expect inflation to be 4% next year, 5% the following year, and 7% per year thereafter. Assume the MRP is zero for Year 1 and increases by 0.1% each year. Compute the quoted, or risk-free, rate of return for Year 1, Year 8, and
problem 3
Assume the real risk-free rate is 3%, and inflation is expected to be 2% for the next 3 years. A 3-year security yields 5.7%. Find the maturity risk premium for the 3-year security.

Solution Preview

Discuss the three forms of business organization in the United States.

The three forms of business organization are:
Sole proprietorship: This business is owned by one person. The owner keeps all of the profits but it bears unlimited liability. The life of this form of business is limited to the life span of its owner.
Partnership: It is similar to the proprietorship except that it has two or more owners. Profits and gains in this form of ...

Solution Summary

The expert discusses the three forms of business organization in the United States.

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