Question 1

The shareholders in a sole proprietorship are represented by:

Accepted Answer

A) the owner of the firm. 
B) the general partner of the firm. 
C) the board of directors of the firm. 
D) sole proprietorships have no shareholders. 
A) the owner of the firm. 
B) the general partner of the firm. 
C) the board of directors of the firm. 
D) sole proprietorships have no shareholders.

Question 2

In a large corporation, budget preparation would most likely be conducted by the:

Accepted Answer

A) treasurer. 
B) controller. 
C) chief financial officer. 
D) financial manager. 
A) treasurer. 
B) controller. 
C) chief financial officer. 
D) financial manager.

Question 3

The short-term decisions of financial managers are comprised of:

Accepted Answer

A) capital structure decisions. 
B) investment decisions. 
C) financing decisions. 
D) both investment and financing decisions. 
A) capital structure decisions. 
B) investment decisions. 
C) financing decisions. 
D) both investment and financing decisions.

Question 4

What does "real asset" mean? What is a "financial asset"?

Accepted Answer

Real assets include all assets used in t

Question 5

What specific arrangements can be used to ensure management is working towards shareholders' goals?

Accepted Answer

Compensation Plans, board of d

Question 6

Provide examples of managerial goals other than the maximization of market value.

Accepted Answer

Managers may attempt to maximize profits

Question 7

Which of the following statements generally cannot be correct for an investor who faces unlimited liability on an investment?

Accepted Answer

A) the investor owns stock in the firm. 
B) the investor has no partners. 
C) the investor is subject to double taxation. 
D) the investor is responsible for managing the firm. 
A) the investor owns stock in the firm. 
B) the investor has no partners. 
C) the investor is subject to double taxation. 
D) the investor is responsible for managing the firm.

Question 8

The best criterion for success in a capital budgeting decision would be to:

Accepted Answer

A) minimize the cost of the investment. 
B) maximize the number of capital budgeting projects. 
C) maximize the difference between cash inflows and cost. 
D) finance all capital budgeting projects with debt. 
A) minimize the cost of the investment. 
B) maximize the number of capital budgeting projects. 
C) maximize the difference between cash inflows and cost. 
D) finance all capital budgeting projects with debt.

Question 9

Provide at least three examples each of real and financial assets that might appear on the balance sheet of General Motors.

Accepted Answer

Examples of real assets for General Moto

Question 10

In a firm having both a treasurer and a controller, which of the following would most likely be handled by the controller?

Accepted Answer

A) internal auditing 
B) credit management 
C) banking relationships 
D) insurance 
A) internal auditing 
B) credit management 
C) banking relationships 
D) insurance

Question 11

Maximizing profits is the same as maximizing the value of the firm.

Accepted Answer

A) True 
 B)False

Question 12

A chief financial officer would typically:

Accepted Answer

A) report to the treasurer, but supervise the controller. 
B) report to the controller, but supervise the treasurer. 
C) report to both the treasurer and controller. 
D) supervise both the treasurer and controller. 
A) report to the treasurer, but supervise the controller. 
B) report to the controller, but supervise the treasurer. 
C) report to both the treasurer and controller. 
D) supervise both the treasurer and controller.

Question 13

Which of the following is least likely to represent an agency problem?

Accepted Answer

A) lavish spending on expense accounts. 
B) plush remodeling of the executive suite. 
C) excessive investment in "safe" projects. 
D) executive incentive compensation plans. 
A) lavish spending on expense accounts. 
B) plush remodeling of the executive suite. 
C) excessive investment in "safe" projects. 
D) executive incentive compensation plans.

Question 14

Managers are subject to the scrutiny of specialists.Their actions are monitored by the security analyst who advises investors to buy, hold, or sell the company's shares.

Accepted Answer

A) True 
 B)False

Question 15

Are all investment decisions made by the financial manager multi-billion dollar investment?

Accepted Answer

No.Most investment decisions a

Question 16

Which of the following would be considered an advantage of the sole proprietorship form of organization?

Accepted Answer

A) wide access to capital markets 
B) unlimited liability 
C) a pool of expertise 
D) profits taxed at only one level 
A) wide access to capital markets 
B) unlimited liability 
C) a pool of expertise 
D) profits taxed at only one level

Question 17

When the management of a business is conducted by individuals other than the owners, the business is more likely to be a:

Accepted Answer

A) corporation. 
B) sole proprietorship. 
C) partnership. 
D) general partner. 
A) corporation. 
B) sole proprietorship. 
C) partnership. 
D) general partner.

Question 18

Unlimited liability is faced by the owners of:

Accepted Answer

A) corporations. 
B) partnerships and corporations. 
C) sole proprietorships and partnerships. 
D) all forms of business organization. 
A) corporations. 
B) partnerships and corporations. 
C) sole proprietorships and partnerships. 
D) all forms of business organization.

Question 19

A financial manager facing a capital budgeting decision must decide whether to:

Accepted Answer

A) issue stock or debt securities. 
B) use the money market or capital market. 
C) use primary markets or secondary markets. 
D) buy new machinery or repair the old. 
A) issue stock or debt securities. 
B) use the money market or capital market. 
C) use primary markets or secondary markets. 
D) buy new machinery or repair the old.

Question 20

One common reason for partnerships to convert to a corporate form of organization is that the partnership:

Accepted Answer

A) faces rapidly growing financing requirements. 
B) wishes to avoid double taxation of profits. 
C) has issued all of its allotted shares. 
D) agreement expires after ten years of use. 
A) faces rapidly growing financing requirements. 
B) wishes to avoid double taxation of profits. 
C) has issued all of its allotted shares. 
D) agreement expires after ten years of use.

Exam 1: Goals and Governance of the Firm

The shareholders in a sole proprietorship are represented by:

In a large corporation, budget preparation would most likely be conducted by the:

The short-term decisions of financial managers are comprised of:

What does "real asset" mean? What is a "financial asset"?

What specific arrangements can be used to ensure management is working towards shareholders' goals?

Provide examples of managerial goals other than the maximization of market value.

Which of the following statements generally cannot be correct for an investor who faces unlimited liability on an investment?

The best criterion for success in a capital budgeting decision would be to:

Provide at least three examples each of real and financial assets that might appear on the balance sheet of General Motors.

In a firm having both a treasurer and a controller, which of the following would most likely be handled by the controller?

Maximizing profits is the same as maximizing the value of the firm.

A chief financial officer would typically:

Which of the following is least likely to represent an agency problem?

Managers are subject to the scrutiny of specialists.Their actions are monitored by the security analyst who advises investors to buy, hold, or sell the company's shares.

Are all investment decisions made by the financial manager multi-billion dollar investment?

Which of the following would be considered an advantage of the sole proprietorship form of organization?

When the management of a business is conducted by individuals other than the owners, the business is more likely to be a:

Unlimited liability is faced by the owners of:

A financial manager facing a capital budgeting decision must decide whether to:

One common reason for partnerships to convert to a corporate form of organization is that the partnership:

Financial Markets and Institutions

Accounting and Finance

Measuring Corporate Performance

The Time Value of Money

Valuing Bonds

Valuing Stocks

Net Present Value and Other Investment Criteria

Using Discounted Cash Flow Analysis to Make Investment Decisions

Project Analysis

Introduction to Risk, Return, and the Opportunity Cost of Capital

Risk, Return, and Capital Budgeting

The Weighted-Average Cost of Capital and Company Valuation

Introduction to Corporate Financing and Governance

Venture Capital, Ipos, and Seasoned Offerings

Debt Policy

Leasing

Payout Policy

Long-Term Financial Planning

Short-Term Financial Planning

Cash and Inventory Management

Credit Management and Collection

Mergers, Acquisitions, and Corporate Control

International Financial Management

Options

Risk Management

Filters