Question 1

The Sarbanes-Oxley Act of 2002 has:

Accepted Answer

A) reduced the annual compliance costs of all publicly traded firms in the U.S. 
B) decreased senior management's involvement in the corporate annual report. 
C) greatly increased the number of U.S.firms that are going public for the first time. 
D) decreased the number of U.S.firms going public on foreign exchanges. 
E) essentially made officers of publicly traded firms personally responsible for the firm's financial statements. 
A) reduced the annual compliance costs of all publicly traded firms in the U.S. 
B) decreased senior management's involvement in the corporate annual report. 
C) greatly increased the number of U.S.firms that are going public for the first time. 
D) decreased the number of U.S.firms going public on foreign exchanges. 
E) essentially made officers of publicly traded firms personally responsible for the firm's financial statements.

Question 2

The potential conflict of interest between a firm's owners and its managers is referred to as which type of conflict?

Accepted Answer

A) Organizational 
B) Structural 
C) Formative 
D) Agency 
E) Territorial 
A) Organizational 
B) Structural 
C) Formative 
D) Agency 
E) Territorial

Question 3

Which one of the following statements about a limited partnership is correct?

Accepted Answer

A) All partners have their losses limited to their capital investment in the partnership. 
B) All partners are treated equally. 
C) There must be at least one general partner. 
D) Equity financing is easy to obtain and unlimited. 
E) Any partner can transfer his or her ownership interest without ending the partnership. 
A) All partners have their losses limited to their capital investment in the partnership. 
B) All partners are treated equally. 
C) There must be at least one general partner. 
D) Equity financing is easy to obtain and unlimited. 
E) Any partner can transfer his or her ownership interest without ending the partnership.

Question 4

Which one of the following correctly defines a common chain of command within a corporation?

Accepted Answer

A) The controller reports directly to the corporate treasurer. 
B) The treasurer reports directly to the board of directors. 
C) The chief financial officer reports directly to the board of directors. 
D) The credit manager reports directly to the controller. 
E) The controller reports directly to the chief financial officer. 
A) The controller reports directly to the corporate treasurer. 
B) The treasurer reports directly to the board of directors. 
C) The chief financial officer reports directly to the board of directors. 
D) The credit manager reports directly to the controller. 
E) The controller reports directly to the chief financial officer.

Question 5

Which one of the following forms of business organization offers liability protection to some of its owners but not to all of its owners?

Accepted Answer

A) Sole proprietorship 
B) General partnership 
C) Limited partnership 
D) Limited liability company 
E) Corporation 
A) Sole proprietorship 
B) General partnership 
C) Limited partnership 
D) Limited liability company 
E) Corporation

Question 6

The primary goal of financial management is to maximize:

Accepted Answer

A) current profits. 
B) market share. 
C) current dividends. 
D) the market value of existing stock. 
E) revenue growth. 
A) current profits. 
B) market share. 
C) current dividends. 
D) the market value of existing stock. 
E) revenue growth.

Question 7

The shareholders of Weil's Markets would benefit if the firm were to be acquired by Better Foods.However, Weil's board of directors rejects the acquisition offer.This is an example of:

Accepted Answer

A) a corporate takeover. 
B) a capital structure issue. 
C) a working capital decision. 
D) an agency conflict. 
E) a compensation issue. 
A) a corporate takeover. 
B) a capital structure issue. 
C) a working capital decision. 
D) an agency conflict. 
E) a compensation issue.

Question 8

An employee has a claim on the cash flows of Martin's Machines.This claim is defined as a claim by one of the firm's:

Accepted Answer

A) residual owners. 
B) shareholders. 
C) financiers. 
D) provisional partners. 
E) stakeholders. 
A) residual owners. 
B) shareholders. 
C) financiers. 
D) provisional partners. 
E) stakeholders.

Question 9

One example of a primary market transaction would be the:

Accepted Answer

A) sale of 100 shares of stock by Maria to her best friend. 
B) purchase by Theo of 5,000 shares of stock from his father. 
C) sale of 1,000 shares of newly issued stock by Alt Company to Miquel. 
D) sale by Terry of 50,000 shares of stock to his brother. 
E) sale of 5,000 shares of stock owned by a corporate CEO to his son. 
A) sale of 100 shares of stock by Maria to her best friend. 
B) purchase by Theo of 5,000 shares of stock from his father. 
C) sale of 1,000 shares of newly issued stock by Alt Company to Miquel. 
D) sale by Terry of 50,000 shares of stock to his brother. 
E) sale of 5,000 shares of stock owned by a corporate CEO to his son.

Question 10

Theo's BBQ has $48,000 in current assets and $39,000 in current liabilities.Decisions related to these accounts are referred to as:

Accepted Answer

A) capital structure decisions. 
B) capital budgeting decisions. 
C) working capital management. 
D) operating management. 
E) fixed account structure. 
A) capital structure decisions. 
B) capital budgeting decisions. 
C) working capital management. 
D) operating management. 
E) fixed account structure.

Question 11

An agency issue is most apt to develop when:

Accepted Answer

A) a firm encounters a period of stagnant growth. 
B) a firm downsizes. 
C) the control of a firm is separated from the firm's ownership. 
D) the firm's owner is also its key manager. 
E) a firm is structured as a general partnership. 
A) a firm encounters a period of stagnant growth. 
B) a firm downsizes. 
C) the control of a firm is separated from the firm's ownership. 
D) the firm's owner is also its key manager. 
E) a firm is structured as a general partnership.

Question 12

The Sarbanes-Oxley Act in 2002 was primarily prompted by which one of the following from the 1990s?

Accepted Answer

A) Increased stock market volatility 
B) Corporate accounting and financial fraud 
C) Increased executive compensation 
D) Increased foreign investment in U.S.stock markets 
E) Increased use of tax loopholes 
A) Increased stock market volatility 
B) Corporate accounting and financial fraud 
C) Increased executive compensation 
D) Increased foreign investment in U.S.stock markets 
E) Increased use of tax loopholes

Question 13

Jenna has been promoted and is now in charge of all external financing.In other words, she is in charge of:

Accepted Answer

A) capital structure management. 
B) asset allocation. 
C) risk management. 
D) capital budgeting. 
E) working capital management. 
A) capital structure management. 
B) asset allocation. 
C) risk management. 
D) capital budgeting. 
E) working capital management.

Question 14

The goal of financial management is to increase the:

Accepted Answer

A) future value of the firm's total equity. 
B) book value of equity. 
C) dividends paid per share. 
D) current market value per share. 
E) number of shares outstanding. 
A) future value of the firm's total equity. 
B) book value of equity. 
C) dividends paid per share. 
D) current market value per share. 
E) number of shares outstanding.

Question 15

Which one of the following is a working capital decision?

Accepted Answer

A) How should the firm raise additional capital to fund its expansion? 
B) What debt-equity ratio is best suited to the firm? 
C) What is the cost of debt financing? 
D) Should the firm borrow money for five or for ten years? 
E) How much cash should the firm keep in reserve? 
A) How should the firm raise additional capital to fund its expansion? 
B) What debt-equity ratio is best suited to the firm? 
C) What is the cost of debt financing? 
D) Should the firm borrow money for five or for ten years? 
E) How much cash should the firm keep in reserve?

Question 16

Which one of the following statements correctly applies to a sole proprietorship?

Accepted Answer

A) The business entity has an unlimited life. 
B) The ownership can easily be transferred to another individual. 
C) The owner enjoys limited liability for the firm's debts. 
D) Debt financing is easy to arrange in the firm's name. 
E) Obtaining additional equity is dependent on the owner's personal finances. 
A) The business entity has an unlimited life. 
B) The ownership can easily be transferred to another individual. 
C) The owner enjoys limited liability for the firm's debts. 
D) Debt financing is easy to arrange in the firm's name. 
E) Obtaining additional equity is dependent on the owner's personal finances.

Question 17

An auction market:

Accepted Answer

A) is an electronic means of exchanging securities. 
B) has a physical trading floor. 
C) handles primary market transactions exclusively. 
D) is also referred to as an OTC market. 
E) is dealer-based. 
A) is an electronic means of exchanging securities. 
B) has a physical trading floor. 
C) handles primary market transactions exclusively. 
D) is also referred to as an OTC market. 
E) is dealer-based.

Question 18

Which one of the following occupations best fits into the corporate area of finance?

Accepted Answer

A) Mortgage broker 
B) Treasury bill analyst 
C) Chief financial officer 
D) Insurance risk manager 
E) Local bank manager 
A) Mortgage broker 
B) Treasury bill analyst 
C) Chief financial officer 
D) Insurance risk manager 
E) Local bank manager

Question 19

In a general partnership, each partner is personally liable for:

Accepted Answer

A) only the partnership debts that he or she personally created. 
B) his or her proportionate share of all partnership debts regardless of which partner incurred that debt. 
C) the total debts of the partnership, even if he or she was unaware of those debts. 
D) the debts of the partnership up to the amount he or she invested in the firm. 
E) all personal and partnership debts incurred by any partner, even if he or she was unaware of those debts. 
A) only the partnership debts that he or she personally created. 
B) his or her proportionate share of all partnership debts regardless of which partner incurred that debt. 
C) the total debts of the partnership, even if he or she was unaware of those debts. 
D) the debts of the partnership up to the amount he or she invested in the firm. 
E) all personal and partnership debts incurred by any partner, even if he or she was unaware of those debts.

Question 20

Which one of the following is a capital structure decision?

Accepted Answer

A) Determining the optimal inventory level 
B) Establishing the preferred debt-equity level 
C) Selecting new equipment to purchase 
D) Setting the terms of sale for credit sales 
E) Determining when suppliers should be paid 
A) Determining the optimal inventory level 
B) Establishing the preferred debt-equity level 
C) Selecting new equipment to purchase 
D) Setting the terms of sale for credit sales 
E) Determining when suppliers should be paid

The Sarbanes-Oxley Act of 2002 has:

The potential conflict of interest between a firm's owners and its managers is referred to as which type of conflict?

Which one of the following statements about a limited partnership is correct?

Which one of the following correctly defines a common chain of command within a corporation?

Which one of the following forms of business organization offers liability protection to some of its owners but not to all of its owners?

The primary goal of financial management is to maximize:

The shareholders of Weil's Markets would benefit if the firm were to be acquired by Better Foods.However, Weil's board of directors rejects the acquisition offer.This is an example of:

An employee has a claim on the cash flows of Martin's Machines.This claim is defined as a claim by one of the firm's:

One example of a primary market transaction would be the:

Theo's BBQ has $48,000 in current assets and $39,000 in current liabilities.Decisions related to these accounts are referred to as:

An agency issue is most apt to develop when:

The Sarbanes-Oxley Act in 2002 was primarily prompted by which one of the following from the 1990s?

Jenna has been promoted and is now in charge of all external financing.In other words, she is in charge of:

The goal of financial management is to increase the:

Which one of the following is a working capital decision?

Which one of the following statements correctly applies to a sole proprietorship?

An auction market:

Which one of the following occupations best fits into the corporate area of finance?

In a general partnership, each partner is personally liable for:

Which one of the following is a capital structure decision?

Financial Statements, Taxes, and Cash Flow

Working With Financial Statements

Introduction to Valuation: the Time Value of Money

Discounted Cash Flow Valuation

Interest Rates and Bond Valuation

Equity Markets and Stock Valuation

Net Present Value and Other Investment Criteria

Making Capital Investment Decisions

Some Lessons From Capital Market History

Risk and Return

Cost of Capital

Leverage and Capital Structure

Dividends and Dividend Policy

Raising Capital

Short-Term Financial Planning

Working Capital Management

International Aspects of Financial Management

Filters

Exam 1: Introduction to Financial Management

The Sarbanes-Oxley Act of 2002 has:

The potential conflict of interest between a firm's owners and its managers is referred to as which type of conflict?

Which one of the following statements about a limited partnership is correct?

Which one of the following correctly defines a common chain of command within a corporation?

Which one of the following forms of business organization offers liability protection to some of its owners but not to all of its owners?

The primary goal of financial management is to maximize:

The shareholders of Weil's Markets would benefit if the firm were to be acquired by Better Foods.However, Weil's board of directors rejects the acquisition offer.This is an example of:

An employee has a claim on the cash flows of Martin's Machines.This claim is defined as a claim by one of the firm's:

One example of a primary market transaction would be the:

Theo's BBQ has $48,000 in current assets and $39,000 in current liabilities.Decisions related to these accounts are referred to as:

An agency issue is most apt to develop when:

The Sarbanes-Oxley Act in 2002 was primarily prompted by which one of the following from the 1990s?

Jenna has been promoted and is now in charge of all external financing.In other words, she is in charge of:

The goal of financial management is to increase the:

Which one of the following is a working capital decision?

Which one of the following statements correctly applies to a sole proprietorship?

An auction market:

Which one of the following occupations best fits into the corporate area of finance?

In a general partnership, each partner is personally liable for:

Which one of the following is a capital structure decision?

Financial Statements, Taxes, and Cash Flow

Working With Financial Statements

Introduction to Valuation: the Time Value of Money

Discounted Cash Flow Valuation

Interest Rates and Bond Valuation

Equity Markets and Stock Valuation

Net Present Value and Other Investment Criteria

Making Capital Investment Decisions

Some Lessons From Capital Market History

Risk and Return

Cost of Capital

Leverage and Capital Structure

Dividends and Dividend Policy

Raising Capital

Short-Term Financial Planning

Working Capital Management

International Aspects of Financial Management

Filters