Question 1

A stakeholder is:

Accepted Answer

A)  a person who owns shares of stock.
B)  any person who has voting rights based on stock ownership of a corporation.
C)  a person who initially founded a firm and currently has management control over that firm.
D)  a creditor to whom a firm currently owes money.
E)  any person or entity other than a stockholder or creditor who potentially has a claim on the cash flows of a firm.F) A) and E)
G) C) and D)

Question 2

The decision to issue additional shares of stock is an example of which one of the following?

Accepted Answer

A)  working capital management
B)  net working capital decision
C)  capital budgeting
D)  controller's duties
E)  capital structure decisionF) A) and E)
G) B) and D)

Question 3

Which one of the following is a working capital management decision?

Accepted Answer

A)  determining the amount of equipment needed to complete a job
B)  determining whether to pay cash for a purchase or use the credit offered by the supplier
C)  determining the amount of long-term debt required to complete a project
D)  determining the number of shares of stock to issue to fund an acquisition
E)  determining whether or not a project should be acceptedF) All of the above
G) A) and C)

Question 4

Which one of the following statements concerning NASDAQ is FALSE?

Accepted Answer

A)  It is easier to be listed on NASDAQ than on the NYSE.
B)  NASDAQ is an electronic market.
C)  NASDAQ is a dealer market.
D)  NASDAQ is an OTC market.
E)  NASDAQ is an auction market.F) C) and D)
G) A) and E)

Question 5

Which one of the following is a capital structure decision?

Accepted Answer

A)  determining which one of two projects to accept
B)  determining how to allocate investment funds to multiple projects
C)  determining the amount of funds needed to finance customer purchases of a new product
D)  determining how much debt should be assumed to fund a project
E)  determining how much inventory will be needed to support a projectF) A) and D)
G) A) and B)

Question 6

A limited partnership:

Accepted Answer

A)  has an unlimited life.
B)  can opt to be taxed as a corporation.
C)  terminates at the death of any limited partner.
D)  has a greater ability to raise capital than a sole proprietorship.
E)  consists solely of limited partners.F) C) and E)
G) A) and B)

Question 7

Which one of the following is a capital budgeting decision?

Accepted Answer

A)  determining how many shares of stock to issue
B)  deciding whether or not to purchase a new machine for the production line
C)  deciding how to refinance a debt issue that is maturing
D)  determining how much inventory to keep on hand
E)  determining how much money should be kept in the checking accountF) A) and B)
G) A) and C)

Question 8

Which of the following should a financial manager consider when analyzing a capital budgeting project?
I.project start up costs
II.timing of all projected cash flows
III.dependability of future cash flows
IV.dollar amount of each projected cash flow

Accepted Answer

A)  I and IV only
B)  I, II, and IV only
C)  I, II, and III only
D)  II, III, and IV only
E)  I, II, III, and IVF) A) and B)
G) C) and D)

Question 9

Which one of the following best illustrates that the management of a firm is adhering to the goal of financial management?

Accepted Answer

A)  increase in the amount of the quarterly dividend
B)  decrease in the per unit production costs
C)  increase in the number of shares outstanding
D)  decrease in the net working capital
E)  increase in the market value per shareF) B) and E)
G) A) and D)

Question 10

Which one of the following terms is defined as the management of a firm's long-term investments?

Accepted Answer

A)  working capital management
B)  financial allocation
C)  agency cost analysis
D)  capital budgeting
E)  capital structureF) A) and B)
G) A) and E)

Question 11

A business owned by a solitary individual who has unlimited liability for its debt is called a:

Accepted Answer

A)  corporation.
B)  sole proprietorship.
C)  general partnership.
D)  limited partnership.
E)  limited liability company.F) A) and C)
G) None of the above

Question 12

Public offerings of debt and equity must be registered with which one of the following?

Accepted Answer

A)  New York Board of Governors
B)  Federal Reserve
C)  NYSE Registration Office
D)  Securities and Exchange Commission
E)  Market Dealers ExchangeF) B) and E)
G) B) and C)

Question 13

Which one of the following terms is defined as a conflict of interest between the corporate shareholders and the corporate managers?

Accepted Answer

A)  articles of incorporation
B)  corporate breakdown
C)  agency problem
D)  bylaws
E)  legal liabilityF) None of the above
G) A) and D)

Question 14

Which one of the following statements is correct?

Accepted Answer

A)  The majority of firms in the U.S. are structured as corporations.
B)  Corporate profits are taxable income to the shareholders when earned.
C)  Corporations can raise large amounts of capital generally easier than partnerships can.
D)  Stockholders face no potential losses related to their corporate investment.
E)  Corporate shareholders elect the corporate president.F) C) and D)
G) A) and E)

Question 15

Which one of the following characteristics applies to a limited liability company?

Accepted Answer

A)  available only to firms having a single owner
B)  limited liability for limited partners only
C)  taxed similar to a partnership
D)  taxed similar to a C corporation
E)  all income generated is totally tax-freeF) A) and C)
G) B) and E)

Question 16

The controller of a corporation generally reports directly to the:

Accepted Answer

A)  board of directors.
B)  chairman of the board.
C)  chief executive officer.
D)  president.
E)  vice president of finance.F) A) and B)
G) A) and C)

Question 17

Which one of the following best describes the primary advantage of being a limited partner instead of a general partner?

Accepted Answer

A)  tax-free income
B)  active participation in the firm's activities
C)  no potential financial loss
D)  greater control over the business affairs of the partnership
E)  maximum loss limited to the capital investedF) B) and E)
G) A) and B)

Question 18

Which one of the following statements concerning stock exchanges is correct?

Accepted Answer

A)  NASDAQ is a broker market.
B)  The NYSE is a dealer market.
C)  The exchange with the strictest listing requirements is NASDAQ.
D)  Some large companies are listed on NASDAQ.
E)  Most debt securities are traded on the NYSE.F) C) and D)
G) A) and E)

Question 19

Which of the following are advantages of the corporate form of business ownership?
I.limited liability for firm debt
II.double taxation
III.ability to raise capital
IV.unlimited firm life

Accepted Answer

A)  I and II only
B)  III and IV only
C)  I, III, and IV only
D)  II, III, and IV only
E)  I, II, III, and IVF) A) and B)
G) All of the above

Question 20

Compare and contrast the NYSE with NSADAQ.

Accepted Answer

The NYSE is an auction market where sell...

Exam 1: Introduction to Corporate Finance

A limited partnership:

Correct AnswerverifiedShow Answer

A business owned by a solitary individual who has unlimited liability for its debt is called a:

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Which one of the following statements concerning stock exchanges is correct?

Correct AnswerverifiedShow Answer

Which one of the following is a working capital management decision?

Correct AnswerverifiedShow Answer

Compare and contrast the NYSE with NSADAQ.

Correct AnswerverifiedThe NYSE is an auction market where sell...View AnswerShow Answer

Which one of the following statements concerning NASDAQ is FALSE?

Correct AnswerverifiedShow Answer

Which one of the following best illustrates that the management of a firm is adhering to the goal of financial management?

Correct AnswerverifiedShow Answer

The decision to issue additional shares of stock is an example of which one of the following?

Correct AnswerverifiedShow Answer

Which one of the following is a capital budgeting decision?

Correct AnswerverifiedShow Answer

Which one of the following statements is correct?

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Which of the following are advantages of the corporate form of business ownership? I.limited liability for firm debt II.double taxation III.ability to raise capital IV.unlimited firm life

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Which one of the following best describes the primary advantage of being a limited partner instead of a general partner?

Correct AnswerverifiedShow Answer

The controller of a corporation generally reports directly to the:

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Public offerings of debt and equity must be registered with which one of the following?

Correct AnswerverifiedShow Answer

A stakeholder is:

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Which one of the following terms is defined as a conflict of interest between the corporate shareholders and the corporate managers?

Correct AnswerverifiedShow Answer

Which of the following should a financial manager consider when analyzing a capital budgeting project? I.project start up costs II.timing of all projected cash flows III.dependability of future cash flows IV.dollar amount of each projected cash flow

Correct AnswerverifiedShow Answer

Which one of the following characteristics applies to a limited liability company?

Correct AnswerverifiedShow Answer

Which one of the following terms is defined as the management of a firm's long-term investments?

Correct AnswerverifiedShow Answer

Which one of the following is a capital structure decision?

Correct AnswerverifiedShow Answer

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The NYSE is an auction market where sell...
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