$1.$ David and Linda Johnson $($spouses$)$ decided to join with their close friend Pat Barton to form a new business to produce documentaries. The partners purchased the necessary equipment. This equipment is easily portable and can be used to shoot documentaries. The stories they plan on using are based on real events and people. The partners want to start in North America and expand into other countries.

They have explored $3$ alternatives of forming their business$--$Partnership, Corporation, S Corporation. Which option would you recommend? State & explain two major reasons to support your answer. Make sure that your reasons are based on the information presented in this case.

$2.$ a$)$ Define agency conflict

b$)$ Define executive stock options.

c$)$ How are stock options expected to reduce agency conflict? $($Close the loop$)$

c$)$ State & explain $2$ reason for the failure of stock options to reduce agency conflict. $($close the loop$)$

$3.$ a$)$ Define wealth maximization.

b$)$ State & explain two reasons for why wealth maximization is a better goal compared

to the goal of profit maximization.