Question 1

The Dodd-Frank financial reform law in 2010 granted shareholders a binding vote on executive compensation.

Accepted Answer

A) True 
 B)False

Question 2

How may a reduction in cash dividends be in the best interests of current shareholders?

Accepted Answer

A)  A reduction of cash dividends is always in the best interests of current shareholders. 
B)  The firm will have available cash to increase current investment and future profits. 
C)  Reduced dividends increase managerial compensation, thus increasing managers' motivation. 
D) A reduction of cash dividends cannot be in the best interests of current shareholders. 
A)  A reduction of cash dividends is always in the best interests of current shareholders. 
B)  The firm will have available cash to increase current investment and future profits. 
C)  Reduced dividends increase managerial compensation, thus increasing managers' motivation. 
D) A reduction of cash dividends cannot be in the best interests of current shareholders.

Question 3

Unlimited liability is faced by the owners of:

Accepted Answer

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

Question 4

A corporation is considered to be closely held when:

Accepted Answer

A)  only a few shareholders exist. 
B)  the market value of the shares is stable. 
C)  it operates in a small geographic area. 
D) management also serves as the board of directors. 
A)  only a few shareholders exist. 
B)  the market value of the shares is stable. 
C)  it operates in a small geographic area. 
D) management also serves as the board of directors.

Question 5

Which of the following is least likely to be discussed in the articles of incorporation?

Accepted Answer

A)  How the firm is to be financed 
B)  The purpose of the business 
C)  The price range of the shares of stock 
D) How the board of directors is to be structured 
A)  How the firm is to be financed 
B)  The purpose of the business 
C)  The price range of the shares of stock 
D) How the board of directors is to be structured

Question 6

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 7

A corporate director:

Accepted Answer

A)  is selected by and can be removed by management. 
B)  can be voted out of power by the shareholders. 
C)  has a lifetime appointment to the board. 
D) is selected by a vote of all corporate stakeholders. 
A)  is selected by and can be removed by management. 
B)  can be voted out of power by the shareholders. 
C)  has a lifetime appointment to the board. 
D) is selected by a vote of all corporate stakeholders.

Question 8

Corporations that issue financial securities such as stock or debt obligations to the public do so primarily to:

Accepted Answer

A)  increase sales. 
B)  become profitable. 
C)  increase their access to funds. 
D) avoid double taxation of their profits. 
A)  increase sales. 
B)  become profitable. 
C)  increase their access to funds. 
D) avoid double taxation of their profits.

Question 9

Which one of these statements correctly applies to a limited partnership?

Accepted Answer

A)  All partners share the daily management duties. 
B)  All partners enjoy limited personal liability. 
C)  General partners have unlimited personal liability. 
D) Taxes are imposed at both the firm and the personal level on profits earned. 
A)  All partners share the daily management duties. 
B)  All partners enjoy limited personal liability. 
C)  General partners have unlimited personal liability. 
D) Taxes are imposed at both the firm and the personal level on profits earned.

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

When the management of a business is conducted by individuals other than the owners, the business is most 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 12

Discuss the interrelationship between a firm's financing and its capital structure decisions.

Accepted Answer

Although capital budgeting decisions con

Question 13

Agency problems can best be characterized as:

Accepted Answer

A)  dislike of firm's bondholders by its equityholders. 
B)  differing incentives between managers and owners. 
C)  spending of corporate resources. 
D) friction between managers and employees. 
A)  dislike of firm's bondholders by its equityholders. 
B)  differing incentives between managers and owners. 
C)  spending of corporate resources. 
D) friction between managers and employees.

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

Provide at least two recent examples of unethical behavior by company executives and the results of that behavior.

Accepted Answer

Denis Kozlowski, the former CEO of Tyco,

The Dodd-Frank financial reform law in 2010 granted shareholders a binding vote on executive compensation.

How may a reduction in cash dividends be in the best interests of current shareholders?

Unlimited liability is faced by the owners of:

A corporation is considered to be closely held when:

Which of the following is least likely to be discussed in the articles of incorporation?

A chief financial officer would typically:

A corporate director:

Corporations that issue financial securities such as stock or debt obligations to the public do so primarily to:

Which one of these statements correctly applies to a limited partnership?

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

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

Discuss the interrelationship between a firm's financing and its capital structure decisions.

Agency problems can best be characterized as:

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

Provide at least two recent examples of unethical behavior by company executives and the results of that behavior.

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

How Corporations Raise Venture Capital and Issue Securities

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

Filters

Exam 1: Goals and Governance of the Corporation

The Dodd-Frank financial reform law in 2010 granted shareholders a binding vote on executive compensation.

How may a reduction in cash dividends be in the best interests of current shareholders?

Unlimited liability is faced by the owners of:

A corporation is considered to be closely held when:

Which of the following is least likely to be discussed in the articles of incorporation?

A chief financial officer would typically:

A corporate director:

Corporations that issue financial securities such as stock or debt obligations to the public do so primarily to:

Which one of these statements correctly applies to a limited partnership?

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

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

Discuss the interrelationship between a firm's financing and its capital structure decisions.

Agency problems can best be characterized as:

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

Provide at least two recent examples of unethical behavior by company executives and the results of that behavior.

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

How Corporations Raise Venture Capital and Issue Securities

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

Filters