1. A sole trader may become a ___________________________ in order to

obtain enough new finance to expand his business. It is more difficult for a sole

trader to secure bank loans therefore lack of finance can be a problem.

2. A partnership which is looking to expand may decide to become a __________________

_____________________________________________ when new owners join the business

- called _______________________________________ . In a Ltd company the

shareholders are family and friends.

3. Only a ____________________________________________________ can raise capital by selling

shares to the general public on the Stock Exchange. The major benefit of becoming either a

Ltd or PLC is ____________________________________________ i.e. shareholders only

stand to lose the value of their investment should the business fail (and not their personal

belongings/savings which could happen to a partnership/sole trader who gets in debt).

4. These shareholders who invest their money to buy shares in a company will receive financial

rewards from the company (if it makes _____________________) in the form of

_______________________.

5. If the company only makes a little profit, ______________________________ shareholders

may not receive any dividend at all. This is because ____________________________

shareholders have the right to receive any dividends first. However because of this greater

___________, ordinary shareholders can expect higher dividends if the company is very profitable.

6. ______________________________________ holders are individuals who loan money to a

business. The loan agreement states how much interest they are due from the business before any

dividends to ordinary and preference shareholders are paid. At an agreed date, these debentures are

_____________________________ in full. Only __________________________________________

_______________________________ can raise extra capital from issuing debentures.

document.docx H BM Business Enterprise