Question 1

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 2

Which of the following is not a financial manager?

Accepted Answer

A) The treasurer. 
B) The controller. 
C) The chief financial officer (CFO). 
D) The marketing manager. 
A) The treasurer. 
B) The controller. 
C) The chief financial officer (CFO). 
D) The marketing manager.

Question 3

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 4

The primary goal of any company should be to maximize current period profit.

Accepted Answer

A) True 
 B)False

Question 5

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 6

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 7

A firm decides to pay for a small investment project through a $1 million increase in short-term bank loans.This is best described as an example of a(n):

Accepted Answer

A) Financing decision. 
B) Investment decision. 
C) Capital budgeting decision. 
D) Capital market decision. 
A) Financing decision. 
B) Investment decision. 
C) Capital budgeting decision. 
D) Capital market decision.

Question 8

The liability of sole proprietors is limited to the amount of their investment in the company.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following groups is least likely to be considered a stakeholder of the firm?

Accepted Answer

A) Government 
B) Bondholders 
C) Competitors 
D) Employees 
A) Government 
B) Bondholders 
C) Competitors 
D) Employees

Question 10

Ethical decision making by management has a payoff for shareholders in terms of:

Accepted Answer

A) Improved capital structure. 
B) Enhanced reputation value. 
C) Increased managerial benefits. 
D) Higher dividend payments. 
A) Improved capital structure. 
B) Enhanced reputation value. 
C) Increased managerial benefits. 
D) Higher dividend payments.

Question 11

When a corporation decides to issue long-term debt in order to pay for the acquisition of real assets, it has made a:

Accepted Answer

A) Capital budgeting decision. 
B) Financing decision. 
C) Money market decision. 
D) Secondary market decision. 
A) Capital budgeting decision. 
B) Financing decision. 
C) Money market decision. 
D) Secondary market decision.

Question 12

Which of the following would not be considered a real asset?

Accepted Answer

A) A corporate bond 
B) A machine 
C) A patent 
D) A factory 
A) A corporate bond 
B) A machine 
C) A patent 
D) A factory

Question 13

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

Accepted Answer

Managers may attempt to maximize profits

Question 14

Describe agency problems in general, and offer at least three examples from corporations.

Accepted Answer

Whenever the firm's managers are differe

Question 15

What general factors may influence the decision of whether to organize as a sole proprietorship, a partnership, or a corporation?

Accepted Answer

Factors that may influence the decision

Question 16

Distinguish between a firm's capital budgeting decision and financing decision.

Accepted Answer

Examples of the capital budgeting decisi

Question 17

How do corporations ensure that managers' and shareholders' interests coincide?

Accepted Answer

Conflicts of interest between managers a

Question 18

Which of the following is correct regarding board membership in a corporation?

Accepted Answer

A) All corporations have board of directors. 
B) In a private corporation, shareholders are also board members. 
C) In a public corporation, shareholders are not board members. 
D) All of the above 
A) All corporations have board of directors. 
B) In a private corporation, shareholders are also board members. 
C) In a public corporation, shareholders are not board members. 
D) All of the above

Question 19

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

Exam 1: Goals and Governance of the Firm

Unlimited liability is faced by the owners of:

Which of the following is not a financial manager?

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

The primary goal of any company should be to maximize current period profit.

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

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

A firm decides to pay for a small investment project through a $1 million increase in short-term bank loans.This is best described as an example of a(n):

The liability of sole proprietors is limited to the amount of their investment in the company.

Which of the following groups is least likely to be considered a stakeholder of the firm?

Ethical decision making by management has a payoff for shareholders in terms of:

When a corporation decides to issue long-term debt in order to pay for the acquisition of real assets, it has made a:

Which of the following would not be considered a real asset?

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

Describe agency problems in general, and offer at least three examples from corporations.

What general factors may influence the decision of whether to organize as a sole proprietorship, a partnership, or a corporation?

Distinguish between a firm's capital budgeting decision and financing decision.

How do corporations ensure that managers' and shareholders' interests coincide?

Which of the following is correct regarding board membership in a corporation?

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

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

Payout Policy

Long-Term Financial Planning

Short-Term Financial Planning

Working Capital Management

Mergers, Acquisitions, and Corporate Control

International Financial Management

Options

Risk Management

Conclusion

What We Do and Do Not Know About Finance

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