Question 1

Which of the firm's financial managers is most likely to be involved with obtaining financing for the firm?

Accepted Answer

A)  Treasurer 
B)  Controller 
C)  Chief Operating Officer 
D)  Board of directors 
A)  Treasurer 
B)  Controller 
C)  Chief Operating Officer 
D)  Board of directors

Question 2

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 3

When managers' compensation plans are tied in a meaningful manner to the value of the firm,agency problems:

Accepted Answer

A)  can be reduced. 
B)  will be created. 
C)  are shifted to other stakeholders. 
D)  are eliminated entirely from the firm. 
A)  can be reduced. 
B)  will be created. 
C)  are shifted to other stakeholders. 
D)  are eliminated entirely from the firm.

Question 4

In a large corporation,preparation of the firm's financial statements 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 5

Which one of the following statements more accurately describes the controller than the treasurer?

Accepted Answer

A)  Reports directly to the chief executive officer 
B)  Monitors capital expenditures to make sure that they are not misappropriated 
C)  Responsible for investing the firm's spare cash 
D)  Responsible for arranging any issue of common stock 
A)  Reports directly to the chief executive officer 
B)  Monitors capital expenditures to make sure that they are not misappropriated 
C)  Responsible for investing the firm's spare cash 
D)  Responsible for arranging any issue of common stock

Question 6

A board of directors is elected as a representative of the corporation's:

Accepted Answer

A)  top management. 
B)  stakeholders. 
C)  shareholders. 
D)  customers. 
A)  top management. 
B)  stakeholders. 
C)  shareholders. 
D)  customers.

Question 7

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 8

The legal "life" of a corporation is:

Accepted Answer

A)  coincidental with that of its CEO. 
B)  equal to the life of its board of directors. 
C)  permanent, as long as shareholders don't change. 
D)  permanent, regardless of current ownership. 
A)  coincidental with that of its CEO. 
B)  equal to the life of its board of directors. 
C)  permanent, as long as shareholders don't change. 
D)  permanent, regardless of current ownership.

Question 9

While control of large public companies in the United States is exercised through the board of directors and pressure from the stock market,in many other countries the stock market is less important and control shifts to major stockholders,typically banks and other companies.

Accepted Answer

A) True 
 B)False

Question 10

Which of these duties are responsibilities of the corporate treasurer?

Accepted Answer

A)  Financial statements and taxes 
B)  Cash management and tax reporting 
C)  Cash management and banking relationships 
D)  Raising capital and financial statements 
A)  Financial statements and taxes 
B)  Cash management and tax reporting 
C)  Cash management and banking relationships 
D)  Raising capital and financial statements

Question 11

When a corporation fails,the maximum that can be lost by an individual shareholder is:

Accepted Answer

A)  the amount of their initial investment. 
B)  the amount of their share of the profits. 
C)  their proportionate share required to pay the corporation's debts. 
D)  the amount of their personal wealth. 
A)  the amount of their initial investment. 
B)  the amount of their share of the profits. 
C)  their proportionate share required to pay the corporation's debts. 
D)  the amount of their personal wealth.

Question 12

Which one of the following is a financial 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

An IOU ("I owe you")from your brother-in-law is a financial asset.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

Which form of organization provides limited liability for the firm but yet allows the professionals working within that firm to be sued personally?

Accepted Answer

A)  Limited liability partnership 
B)  Limited liability company 
C)  Sole proprietorship 
D)  Professional corporation 
A)  Limited liability partnership 
B)  Limited liability company 
C)  Sole proprietorship 
D)  Professional corporation

Question 16

Boards of directors are generally appointed by the firm's senior officers.

Accepted Answer

A) True 
 B)False

Question 17

GlaxoSmithKline's spending of $6 billion in 2012 on research and development of new drugs is a capital budgeting decision but not a financing decision.

Accepted Answer

A) True 
 B)False

Question 18

Volkswagen's issuance of a 2.5 billion euro convertible bond is a financing decision.

Accepted Answer

A) True 
 B)False

Question 19

Which one of the following would be considered a capital budgeting decision?

Accepted Answer

A)  Planning to issue common stock rather than issuing preferred stock 
B)  Deciding to expand into a new line of products, at a cost of $5 million 
C)  Repurchasing shares of common stock 
D)  Issuing debt in the form of long-term bonds 
A)  Planning to issue common stock rather than issuing preferred stock 
B)  Deciding to expand into a new line of products, at a cost of $5 million 
C)  Repurchasing shares of common stock 
D)  Issuing debt in the form of long-term bonds

Question 20

Corporations are referred to as public companies when their:

Accepted Answer

A)  shareholders have no tax liability. 
B)  shares are held by the federal or state government. 
C)  stock is publicly traded. 
D)  products or services are available to the public. 
A)  shareholders have no tax liability. 
B)  shares are held by the federal or state government. 
C)  stock is publicly traded. 
D)  products or services are available to the public.

Exam 1: Goals and Governance of the Firm

Which of the firm's financial managers is most likely to be involved with obtaining financing for the firm?

A chief financial officer would typically:

When managers' compensation plans are tied in a meaningful manner to the value of the firm,agency problems:

In a large corporation,preparation of the firm's financial statements would most likely be conducted by the:

Which one of the following statements more accurately describes the controller than the treasurer?

A board of directors is elected as a representative of the corporation's:

Unlimited liability is faced by the owners of:

The legal "life" of a corporation is:

While control of large public companies in the United States is exercised through the board of directors and pressure from the stock market,in many other countries the stock market is less important and control shifts to major stockholders,typically banks and other companies.

Which of these duties are responsibilities of the corporate treasurer?

When a corporation fails,the maximum that can be lost by an individual shareholder is:

Which one of the following is a financial asset?

An IOU ("I owe you")from your brother-in-law is a financial asset.

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

Which form of organization provides limited liability for the firm but yet allows the professionals working within that firm to be sued personally?

Boards of directors are generally appointed by the firm's senior officers.

GlaxoSmithKline's spending of $6 billion in 2012 on research and development of new drugs is a capital budgeting decision but not a financing decision.

Volkswagen's issuance of a 2.5 billion euro convertible bond is a financing decision.

Which one of the following would be considered a capital budgeting decision?

Corporations are referred to as public companies when their:

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

Filters