Question 1

The decision to issue additional shares of stock is an example of which one of the following?

Accepted Answer

A) working capital management 
B) net working capital decision 
C) capital budgeting 
D) controller's duties 
E) capital structure decision 
A) working capital management 
B) net working capital decision 
C) capital budgeting 
D) controller's duties 
E) capital structure decision

Question 2

Which one of the following is a capital budgeting decision?

Accepted Answer

A) determining how many shares of stock to issue 
B) deciding whether or not to purchase a new machine for the production line 
C) deciding how to refinance a debt issue that is maturing 
D) determining how much inventory to keep on hand 
E) determining how much money should be kept in the checking account 
A) determining how many shares of stock to issue 
B) deciding whether or not to purchase a new machine for the production line 
C) deciding how to refinance a debt issue that is maturing 
D) determining how much inventory to keep on hand 
E) determining how much money should be kept in the checking account

Question 3

Which one of the following statements concerning NASDAQ is FALSE?

Accepted Answer

A) It is easier to be listed on NASDAQ than on the NYSE. 
B) NASDAQ is an electronic market. 
C) NASDAQ is a dealer market. 
D) NASDAQ is an OTC market. 
E) NASDAQ is an auction market. 
A) It is easier to be listed on NASDAQ than on the NYSE. 
B) NASDAQ is an electronic market. 
C) NASDAQ is a dealer market. 
D) NASDAQ is an OTC market. 
E) NASDAQ is an auction market.

Question 4

Which one of the following terms is defined as a conflict of interest between the corporate shareholders and the corporate managers?

Accepted Answer

A) articles of incorporation 
B) corporate breakdown 
C) agency problem 
D) bylaws 
E) legal liability 
A) articles of incorporation 
B) corporate breakdown 
C) agency problem 
D) bylaws 
E) legal liability

Question 5

A business owned by a solitary individual who has unlimited liability for its debt is called a:

Accepted Answer

A) corporation. 
B) sole proprietorship. 
C) general partnership. 
D) limited partnership. 
E) limited liability company. 
A) corporation. 
B) sole proprietorship. 
C) general partnership. 
D) limited partnership. 
E) limited liability company.

Question 6

Which one of the following statements concerning stock exchanges is correct?

Accepted Answer

A) NASDAQ is a broker market. 
B) The NYSE is a dealer market. 
C) The exchange with the strictest listing requirements is NASDAQ. 
D) Some large companies are listed on NASDAQ. 
E) Most debt securities are traded on the NYSE. 
A) NASDAQ is a broker market. 
B) The NYSE is a dealer market. 
C) The exchange with the strictest listing requirements is NASDAQ. 
D) Some large companies are listed on NASDAQ. 
E) Most debt securities are traded on the NYSE.

Question 7

Public offerings of debt and equity must be registered with which one of the following?

Accepted Answer

A) New York Board of Governors 
B) Federal Reserve 
C) NYSE Registration Office 
D) Securities and Exchange Commission 
E) Market Dealers Exchange 
A) New York Board of Governors 
B) Federal Reserve 
C) NYSE Registration Office 
D) Securities and Exchange Commission 
E) Market Dealers Exchange

Question 8

Which one of the following best describes the primary advantage of being a limited partner instead of a general partner?

Accepted Answer

A) tax-free income 
B) active participation in the firm's activities 
C) no potential financial loss 
D) greater control over the business affairs of the partnership 
E) maximum loss limited to the capital invested 
A) tax-free income 
B) active participation in the firm's activities 
C) no potential financial loss 
D) greater control over the business affairs of the partnership 
E) maximum loss limited to the capital invested

Question 9

Which one of the following is a working capital management decision?

Accepted Answer

A) determining the amount of equipment needed to complete a job 
B) determining whether to pay cash for a purchase or use the credit offered by the supplier 
C) determining the amount of long-term debt required to complete a project 
D) determining the number of shares of stock to issue to fund an acquisition 
E) determining whether or not a project should be accepted 
A) determining the amount of equipment needed to complete a job 
B) determining whether to pay cash for a purchase or use the credit offered by the supplier 
C) determining the amount of long-term debt required to complete a project 
D) determining the number of shares of stock to issue to fund an acquisition 
E) determining whether or not a project should be accepted

Question 10

Which one of the following terms is defined as the management of a firm's long-term investments?

Accepted Answer

A) working capital management 
B) financial allocation 
C) agency cost analysis 
D) capital budgeting 
E) capital structure 
A) working capital management 
B) financial allocation 
C) agency cost analysis 
D) capital budgeting 
E) capital structure

Question 11

Which one of the following statements is correct?

Accepted Answer

A) The majority of firms in the U.S. are structured as corporations. 
B) Corporate profits are taxable income to the shareholders when earned. 
C) Corporations can raise large amounts of capital generally easier than partnerships can. 
D) Stockholders face no potential losses related to their corporate investment. 
E) Corporate shareholders elect the corporate president. 
A) The majority of firms in the U.S. are structured as corporations. 
B) Corporate profits are taxable income to the shareholders when earned. 
C) Corporations can raise large amounts of capital generally easier than partnerships can. 
D) Stockholders face no potential losses related to their corporate investment. 
E) Corporate shareholders elect the corporate president.

Question 12

Which one of the following is a capital structure decision?

Accepted Answer

A) determining which one of two projects to accept 
B) determining how to allocate investment funds to multiple projects 
C) determining the amount of funds needed to finance customer purchases of a new product 
D) determining how much debt should be assumed to fund a project 
E) determining how much inventory will be needed to support a project 
A) determining which one of two projects to accept 
B) determining how to allocate investment funds to multiple projects 
C) determining the amount of funds needed to finance customer purchases of a new product 
D) determining how much debt should be assumed to fund a project 
E) determining how much inventory will be needed to support a project

Question 13

Which one of the following characteristics applies to a limited liability company?

Accepted Answer

A) available only to firms having a single owner 
B) limited liability for limited partners only 
C) taxed similar to a partnership 
D) taxed similar to a C corporation 
E) all income generated is totally tax-free 
A) available only to firms having a single owner 
B) limited liability for limited partners only 
C) taxed similar to a partnership 
D) taxed similar to a C corporation 
E) all income generated is totally tax-free

Question 14

Which one of the following best illustrates that the management of a firm is adhering to the goal of financial management?

Accepted Answer

A) increase in the amount of the quarterly dividend 
B) decrease in the per unit production costs 
C) increase in the number of shares outstanding 
D) decrease in the net working capital 
E) increase in the market value per share 
A) increase in the amount of the quarterly dividend 
B) decrease in the per unit production costs 
C) increase in the number of shares outstanding 
D) decrease in the net working capital 
E) increase in the market value per share

Question 15

Compare and contrast the NYSE with NSADAQ.

Accepted Answer

The NYSE is an auction market where sell

Question 16

Which of the following should a financial manager consider when analyzing a capital budgeting project?
I.project start up costs
II.timing of all projected cash flows
III.dependability of future cash flows
IV.dollar amount of each projected cash flow

Accepted Answer

A) I and IV only 
B) I, II, and IV only 
C) I, II, and III only 
D) II, III, and IV only 
E) I, II, III, and IV 
A) I and IV only 
B) I, II, and IV only 
C) I, II, and III only 
D) II, III, and IV only 
E) I, II, III, and IV

Question 17

A stakeholder is:

Accepted Answer

A) a person who owns shares of stock. 
B) any person who has voting rights based on stock ownership of a corporation. 
C) a person who initially founded a firm and currently has management control over that firm. 
D) a creditor to whom a firm currently owes money. 
E) any person or entity other than a stockholder or creditor who potentially has a claim on the cash flows of a firm. 
A) a person who owns shares of stock. 
B) any person who has voting rights based on stock ownership of a corporation. 
C) a person who initially founded a firm and currently has management control over that firm. 
D) a creditor to whom a firm currently owes money. 
E) any person or entity other than a stockholder or creditor who potentially has a claim on the cash flows of a firm.

Question 18

Which of the following are advantages of the corporate form of business ownership?
I.limited liability for firm debt
II.double taxation
III.ability to raise capital
IV.unlimited firm life

Accepted Answer

A) I and II only 
B) III and IV only 
C) I, III, and IV only 
D) II, III, and IV only 
E) I, II, III, and IV 
A) I and II only 
B) III and IV only 
C) I, III, and IV only 
D) II, III, and IV only 
E) I, II, III, and IV

Question 19

The controller of a corporation generally reports directly to the:

Accepted Answer

A) board of directors. 
B) chairman of the board. 
C) chief executive officer. 
D) president. 
E) vice president of finance. 
A) board of directors. 
B) chairman of the board. 
C) chief executive officer. 
D) president. 
E) vice president of finance.

Question 20

A limited partnership:

Accepted Answer

A) has an unlimited life. 
B) can opt to be taxed as a corporation. 
C) terminates at the death of any limited partner. 
D) has a greater ability to raise capital than a sole proprietorship. 
E) consists solely of limited partners. 
A) has an unlimited life. 
B) can opt to be taxed as a corporation. 
C) terminates at the death of any limited partner. 
D) has a greater ability to raise capital than a sole proprietorship. 
E) consists solely of limited partners.

Exam 1: Introduction to Corporate Finance

The decision to issue additional shares of stock is an example of which one of the following?

Which one of the following is a capital budgeting decision?

Which one of the following statements concerning NASDAQ is FALSE?

Which one of the following terms is defined as a conflict of interest between the corporate shareholders and the corporate managers?

A business owned by a solitary individual who has unlimited liability for its debt is called a:

Which one of the following statements concerning stock exchanges is correct?

Public offerings of debt and equity must be registered with which one of the following?

Which one of the following best describes the primary advantage of being a limited partner instead of a general partner?

Which one of the following is a working capital management decision?

Which one of the following terms is defined as the management of a firm's long-term investments?

Which one of the following statements is correct?

Which one of the following is a capital structure decision?

Which one of the following characteristics applies to a limited liability company?

Which one of the following best illustrates that the management of a firm is adhering to the goal of financial management?

Compare and contrast the NYSE with NSADAQ.

Which of the following should a financial manager consider when analyzing a capital budgeting project? I.project start up costs II.timing of all projected cash flows III.dependability of future cash flows IV.dollar amount of each projected cash flow

A stakeholder is:

Which of the following are advantages of the corporate form of business ownership? I.limited liability for firm debt II.double taxation III.ability to raise capital IV.unlimited firm life

The controller of a corporation generally reports directly to the:

A limited partnership:

Financial Statements, Taxes, and Cash Flow

Working With Financial Statements

Long-Term Financial Planning and Growth

Introduction to Valuation: The Time Value of Money

Discounted Cash Flow Valuation

Interest Rates and Bond Valuation

Stock Valuation

Net Present Value and Other Investment Criteria

Making Capital Investment Decisions

Project Analysis and Evaluation

Some Lessons From Capital Market History

Return, Risk, and the Security Market Line

Cost of Capital

Raising Capital

Financial Leverage and Capital Structure Policy

Dividends and Payout Policy

Short-Term Finance and Planning

Cash and Liquidity Management

Credit and Inventory Management

International Corporate Finance

Behavioral Finance: Implications for Financial Management

Enterprise Risk Management

Options and Corporate Finance

Option Valuation

Mergers and Acquisitions

Leasing

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