Question 1

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) B) and C)
G) None of the above

Question 2

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) A) and B)
G) A) and E)

Question 3

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) A) and E)
G) C) and D)

Question 4

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 C)
G) A) and D)

Question 5

Which one of the following actions by a financial manager is most apt to create an agency problem?

Accepted Answer

A)  refusing to borrow money when doing so will create losses for the firm
B)  refusing to lower selling prices if doing so will reduce the net profits
C)  refusing to expand the company if doing so will lower the value of the equity
D)  agreeing to pay bonuses based on the market value of the company stock rather than on the firm's level of sales
E)  increasing current profits when doing so lowers the value of the firm's equityF) A) and B)
G) A) and C)

Question 6

A general partner:

Accepted Answer

A)  is personally responsible for all the partnership debts.
B)  has no say over a firm's daily operations.
C)  faces double taxation whereas a limited partner does not.
D)  has a maximum loss equal to his or her equity investment.
E)  receives a salary in lieu of a portion of the profits.F) C) and D)
G) B) and E)

Question 7

Which of the following help convince managers to work in the best interest of the stockholders? Assume there are no golden parachutes.
I.compensation based on the value of the stock
II.stock option plans
III.threat of a company takeover
IV.threat of a proxy fight

Accepted Answer

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

Question 8

Which of the following accounts are included in working capital management?
I.accounts payable
II.accounts receivable
III.fixed assets
IV.inventory

Accepted Answer

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

Question 9

Sally and Alicia currently are general partners in a business located in Atlanta,Georgia.They are content with their current tax situation but are both very uncomfortable with the unlimited liability to which they are each subjected.Which form of business entity should they consider to replace their general partnership assuming they wish to remain the only two owners of their business? Whichever organization they select,they wish to be treated equally.

Accepted Answer

A)  sole proprietorship
B)  joint stock company
C)  limited partnership
D)  limited liability company
E)  corporationF) A) and B)
G) None of the above

Question 10

The articles of incorporation:
I.describe the purpose of the firm.
II.are amended periodically.
III.set forth the number of shares of stock that can be issued.
IV.detail the method that will be used to elect corporate directors.

Accepted Answer

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

Question 11

Give some examples of ways in which manager's goals can differ from those of shareholders.

Accepted Answer

The primary goal of a financial manager ...

Question 12

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) A) and C)
G) None of the above

Question 13

Which one of the following functions should be the responsibility of the controller rather than the treasurer?

Accepted Answer

A)  daily cash deposit
B)  income tax returns
C)  equipment purchase analysis
D)  customer credit approval
E)  payment to a vendorF) A) and E)
G) B) and C)

Question 14

Corporate bylaws:

Accepted Answer

A)  must be amended should a firm decide to increase the number of shares authorized.
B)  cannot be amended once adopted.
C)  define the name by which the firm will operate.
D)  describe the intended life and purpose of the organization.
E)  determine how a corporation regulates itself.F) A) and C)
G) A) and B)

Question 15

Which one of the following is a primary market transaction?

Accepted Answer

A)  sale of currently outstanding stock by a dealer to an individual investor
B)  sale of a new share of stock to an individual investor
C)  stock ownership transfer from one shareholder to another shareholder
D)  gift of stock from one shareholder to another shareholder
E)  gift of stock by a shareholder to a family memberF) None of the above
G) A) and B)

Question 16

A business created as a distinct legal entity and treated as a legal "person" is called a:

Accepted Answer

A)  corporation.
B)  sole proprietorship.
C)  general partnership.
D)  limited partnership.
E)  unlimited liability company.F) A) and C)
G) B) and D)

Question 17

Which of the following individuals have unlimited liability based on their ownership interest?
I.general partner
II.sole proprietor
III.stockholder
IV.limited partner

Accepted Answer

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

Question 18

Which one of the following grants an individual the right to vote on behalf of a shareholder?

Accepted Answer

A)  proxy
B)  by-laws
C)  indenture agreement
D)  stock option
E)  stock auditF) A) and B)
G) All of the above

Question 19

A firm which opts to "go dark" in response to the Sarbanes-Oxley Act:

Accepted Answer

A)  must continue to provide audited financial statements to the public.
B)  must continue to provide a detailed list of internal control deficiencies on an annual basis.
C)  can provide less information to its shareholders than it did prior to "going dark".
D)  can continue publicly trading its stock but only on the exchange on which it was previously listed.
E)  ceases to exist.F) A) and B)
G) B) and D)

Question 20

Which one of the following business types is best suited to raising large amounts of capital?

Accepted Answer

A)  sole proprietorship
B)  limited liability company
C)  corporation
D)  general partnership
E)  limited partnershipF) A) and B)
G) A) and C)

Exam 1: Introduction to Corporate Finance

Which one of the following grants an individual the right to vote on behalf of a shareholder?

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

Correct Answer
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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 Answer
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Corporate bylaws:

Correct Answer
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A firm which opts to "go dark" in response to the Sarbanes-Oxley Act:

Correct Answer
verified

The controller of a corporation generally reports directly to the:

Correct Answer
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Which one of the following actions by a financial manager is most apt to create an agency problem?

Correct Answer
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Which of the following help convince managers to work in the best interest of the stockholders? Assume there are no golden parachutes. I.compensation based on the value of the stock II.stock option plans III.threat of a company takeover IV.threat of a proxy fight

Correct Answer
verified

Which of the following accounts are included in working capital management? I.accounts payable II.accounts receivable III.fixed assets IV.inventory

Correct Answer
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Which of the following individuals have unlimited liability based on their ownership interest? I.general partner II.sole proprietor III.stockholder IV.limited partner

Correct Answer
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Which one of the following statements is correct?

Correct Answer
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A general partner:

Correct Answer
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Which one of the following functions should be the responsibility of the controller rather than the treasurer?

Correct Answer
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The articles of incorporation: I.describe the purpose of the firm. II.are amended periodically. III.set forth the number of shares of stock that can be issued. IV.detail the method that will be used to elect corporate directors.

Correct Answer
verified

A business created as a distinct legal entity and treated as a legal "person" is called a:

Correct Answer
verified

Which one of the following is a primary market transaction?

Correct Answer
verified

Which one of the following business types is best suited to raising large amounts of capital?

Correct Answer
verified

Correct Answer
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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 Answer
verified

Give some examples of ways in which manager's goals can differ from those of shareholders.

Correct Answer
verified
The primary goal of a financial manager ...
View Answer

Exam 1: Introduction to Corporate Finance

Which one of the following grants an individual the right to vote on behalf of a shareholder?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Corporate bylaws:

Correct AnswerverifiedShow Answer

A firm which opts to "go dark" in response to the Sarbanes-Oxley Act:

Correct AnswerverifiedShow Answer

The controller of a corporation generally reports directly to the:

Correct AnswerverifiedShow Answer

Which one of the following actions by a financial manager is most apt to create an agency problem?

Correct AnswerverifiedShow Answer

Which of the following help convince managers to work in the best interest of the stockholders? Assume there are no golden parachutes. I.compensation based on the value of the stock II.stock option plans III.threat of a company takeover IV.threat of a proxy fight

Correct AnswerverifiedShow Answer

Which of the following accounts are included in working capital management? I.accounts payable II.accounts receivable III.fixed assets IV.inventory

Correct AnswerverifiedShow Answer

Which of the following individuals have unlimited liability based on their ownership interest? I.general partner II.sole proprietor III.stockholder IV.limited partner

Correct AnswerverifiedShow Answer

Which one of the following statements is correct?

Correct AnswerverifiedShow Answer

A general partner:

Correct AnswerverifiedShow Answer

Which one of the following functions should be the responsibility of the controller rather than the treasurer?

Correct AnswerverifiedShow Answer

The articles of incorporation: I.describe the purpose of the firm. II.are amended periodically. III.set forth the number of shares of stock that can be issued. IV.detail the method that will be used to elect corporate directors.

Correct AnswerverifiedShow Answer

A business created as a distinct legal entity and treated as a legal "person" is called a:

Correct AnswerverifiedShow Answer

Which one of the following is a primary market transaction?

Correct AnswerverifiedShow Answer

Which one of the following business types is best suited to raising large amounts of capital?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Give some examples of ways in which manager's goals can differ from those of shareholders.

Correct AnswerverifiedThe primary goal of a financial manager ...View AnswerShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The primary goal of a financial manager ...
View Answer