MBA 620 MIDTERM EXAM 2026 PRACTICE
TEST PAPER CORPORATE STRATEGY AND
COMPETITIVE ANALYSIS REVIEW SHEET FULL
SOLUTIONS
◉ Partnership. Answer: exists when two or more persons associate
to conduct a business
◉ Corporation. Answer: A legal entity created by a state. Separate
and distinct from its owners and managers.
◉ Charter. Answer: Must be filed to become a corporation. Includes
the following information: (1) name of the proposed corporation, (2)
types of activities it will pursue, (3) amount of capital stock, (4)
number of directors, and (5) names and addresses of directors.
◉ Bylaws. Answer: A set of rules drawn up by the
founders of the corporation. Included are such points as: (1) how
directors are to be elected (all elected each year or perhaps one-
third each year for 3-year terms), (2) whether the existing
stockholders will have the first right to buy any new shares the firm
issues, and (3) procedures for changing the bylaws themselves,
should conditions require it.
,◉ Limited partnership. Answer: Limited partners' liabilities,
investment returns and control are limited, while general partners
have unlimited liability and control. At least one partner is liable for
all the debts in the partnership.
◉ Limited liability partnership. Answer: Combines the limited
liability advantage of a corporation with the tax advantages of a
partnership. Sometimes called a limited liability company (LLC).
◉ Professional corporation. Answer: has most of the benefits of
incorporation but the participants are not relieved of professional
(malpractice) liability. Sometimes called a professional association
(PA).
◉ Stockholder wealth maximization. Answer: The appropriate goal
for management decisions. The risk and timing associated with
expected earnings per share and cash flows are considered in order
to maximize the price of the firm's common stock. A duty that needs
to be fulfill by corporations.
◉ Money market. Answer: A financial market for debt securities
with maturities of less than 1 year (short-term). Example: The New
York money market.
◉ Capital market. Answer: The financial markets for long-term debt
and corporate stocks. Example: The New York Stock Exchange.
,◉ Primary market. Answer: The markets in which newly issued
securities are
sold for the first time.
◉ Secondary market. Answer: Where securities are resold after
initial issue in the
primary market. Example: The New York Stock Exchange.
◉ Private markets. Answer: Transactions are worked out directly
between two parties and structured in any manners that appeal to
them. Example: Bank loans and private placements of debt with
insurance companies. Securities are more tailor-
made but less liquid.
◉ Public markets. Answer: Standardized contracts are traded on
organized exchanges. Securities that are issued here, such as
common stock and corporate bonds, are ultimately held by a large
number of individuals. Securities are more liquid but subject to
greater
standardization.
◉ Derivatives. Answer: Those underlying assets that derive their
value from other traded assets. Examples: Futures, options,
, forwards. The value is derived from the value of an underlying real
asset.
◉ Investment bank. Answer: Assist in the design of corporate
securities and then sell them to savers (investors) in the primary
markets
◉ Financial services corporation. Answer: Offer a wide range of
financial services such as brokerage operations, insurance, and
commercial banking.
◉ Financial intermediary. Answer: Buys security with funds that are
obtained by
issuing its own securities. An example is a common stock mutual
fund that buys common stocks with
funds obtained by issuing shares in the mutual fund.
◉ Mutual fund. Answer: An organization that pools the money
deposited by savers to buy financial instruments. These instruments
receive dividends and interest on it. The resulting dividends,
interest, and capital gains are distributed to the fund's shareholders
after the deduction of operating expenses. Different funds are
designed to meet different objectives.
TEST PAPER CORPORATE STRATEGY AND
COMPETITIVE ANALYSIS REVIEW SHEET FULL
SOLUTIONS
◉ Partnership. Answer: exists when two or more persons associate
to conduct a business
◉ Corporation. Answer: A legal entity created by a state. Separate
and distinct from its owners and managers.
◉ Charter. Answer: Must be filed to become a corporation. Includes
the following information: (1) name of the proposed corporation, (2)
types of activities it will pursue, (3) amount of capital stock, (4)
number of directors, and (5) names and addresses of directors.
◉ Bylaws. Answer: A set of rules drawn up by the
founders of the corporation. Included are such points as: (1) how
directors are to be elected (all elected each year or perhaps one-
third each year for 3-year terms), (2) whether the existing
stockholders will have the first right to buy any new shares the firm
issues, and (3) procedures for changing the bylaws themselves,
should conditions require it.
,◉ Limited partnership. Answer: Limited partners' liabilities,
investment returns and control are limited, while general partners
have unlimited liability and control. At least one partner is liable for
all the debts in the partnership.
◉ Limited liability partnership. Answer: Combines the limited
liability advantage of a corporation with the tax advantages of a
partnership. Sometimes called a limited liability company (LLC).
◉ Professional corporation. Answer: has most of the benefits of
incorporation but the participants are not relieved of professional
(malpractice) liability. Sometimes called a professional association
(PA).
◉ Stockholder wealth maximization. Answer: The appropriate goal
for management decisions. The risk and timing associated with
expected earnings per share and cash flows are considered in order
to maximize the price of the firm's common stock. A duty that needs
to be fulfill by corporations.
◉ Money market. Answer: A financial market for debt securities
with maturities of less than 1 year (short-term). Example: The New
York money market.
◉ Capital market. Answer: The financial markets for long-term debt
and corporate stocks. Example: The New York Stock Exchange.
,◉ Primary market. Answer: The markets in which newly issued
securities are
sold for the first time.
◉ Secondary market. Answer: Where securities are resold after
initial issue in the
primary market. Example: The New York Stock Exchange.
◉ Private markets. Answer: Transactions are worked out directly
between two parties and structured in any manners that appeal to
them. Example: Bank loans and private placements of debt with
insurance companies. Securities are more tailor-
made but less liquid.
◉ Public markets. Answer: Standardized contracts are traded on
organized exchanges. Securities that are issued here, such as
common stock and corporate bonds, are ultimately held by a large
number of individuals. Securities are more liquid but subject to
greater
standardization.
◉ Derivatives. Answer: Those underlying assets that derive their
value from other traded assets. Examples: Futures, options,
, forwards. The value is derived from the value of an underlying real
asset.
◉ Investment bank. Answer: Assist in the design of corporate
securities and then sell them to savers (investors) in the primary
markets
◉ Financial services corporation. Answer: Offer a wide range of
financial services such as brokerage operations, insurance, and
commercial banking.
◉ Financial intermediary. Answer: Buys security with funds that are
obtained by
issuing its own securities. An example is a common stock mutual
fund that buys common stocks with
funds obtained by issuing shares in the mutual fund.
◉ Mutual fund. Answer: An organization that pools the money
deposited by savers to buy financial instruments. These instruments
receive dividends and interest on it. The resulting dividends,
interest, and capital gains are distributed to the fund's shareholders
after the deduction of operating expenses. Different funds are
designed to meet different objectives.
