Question 1

A business partner whose potential financial loss in the partnership will not exceed his or her investment in that partnership is called a:

Accepted Answer

A) generally partner. 
B) sole proprietor. 
C) limited partner. 
D) corporate shareholder. 
E) zero partner. 
A) generally partner. 
B) sole proprietor. 
C) limited partner. 
D) corporate shareholder. 
E) zero partner.

Question 2

Which one of the following best states the primary goal of financial management?

Accepted Answer

A) maximize current dividends per share 
B) maximize the current value per share 
C) increase cash flow and avoid financial distress 
D) minimize operational costs while maximizing firm efficiency 
E) maintain steady growth while increasing current profits 
A) maximize current dividends per share 
B) maximize the current value per share 
C) increase cash flow and avoid financial distress 
D) minimize operational costs while maximizing firm efficiency 
E) maintain steady growth while increasing current profits

Question 3

Which one of the following terms is defined as the mixture of a firm's debt and equity financing?

Accepted Answer

A) working capital management 
B) cash management 
C) cost analysis 
D) capital budgeting 
E) capital structure 
A) working capital management 
B) cash management 
C) cost analysis 
D) capital budgeting 
E) capital structure

Question 4

Which one of the following statements is correct concerning the NYSE?

Accepted Answer

A) The publicly traded shares of a NYSE-listed firm must be worth at least $250 million. 
B) The NYSE is the largest dealer market for listed securities in the United States. 
C) The listing requirements for the NYSE are more stringent than those of NASDAQ. 
D) Any corporation desiring to be listed on the NYSE can do so for a fee. 
E) The NYSE is an OTC market functioning as both a primary and a secondary market. 
A) The publicly traded shares of a NYSE-listed firm must be worth at least $250 million. 
B) The NYSE is the largest dealer market for listed securities in the United States. 
C) The listing requirements for the NYSE are more stringent than those of NASDAQ. 
D) Any corporation desiring to be listed on the NYSE can do so for a fee. 
E) The NYSE is an OTC market functioning as both a primary and a secondary market.

Question 5

Which one of the following business types is best suited to raising large amounts of capital?

Accepted Answer

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

Question 6

From a liability point of view,what is the difference between investing in a sole proprietorship and a general partnership?

Accepted Answer

Both a sole proprietor and a general par

Question 7

Which of the following accounts are included in working capital management?
I.accounts payable
II.accounts receivable
III.fixed assets
IV.inventory

Accepted Answer

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

Question 8

Which one of the following is defined as a firm's short-term assets and its short-term liabilities?

Accepted Answer

A) working capital 
B) debt 
C) investment capital 
D) net capital 
E) capital structure 
A) working capital 
B) debt 
C) investment capital 
D) net capital 
E) capital structure

Question 9

The Sarbanes-Oxley Act of 2002 is a governmental response to:

Accepted Answer

A) decreasing corporate profits. 
B) the terrorists attacks on 9/11/2001. 
C) a weakening economy. 
D) deregulation of the stock exchanges. 
E) management greed and abuses. 
A) decreasing corporate profits. 
B) the terrorists attacks on 9/11/2001. 
C) a weakening economy. 
D) deregulation of the stock exchanges. 
E) management greed and abuses.

Question 10

Why are so many businesses structured as sole proprietorships when the corporate form of business offers more advantages?

Accepted Answer

A significant advantage of the sole prop

Question 11

Which one of the following statements concerning a sole proprietorship is correct?

Accepted Answer

A) The life of a sole proprietorship is potentially unlimited. 
B) A sole proprietor can generally raise large sums of capital quite easily. 
C) Transferring ownership of a sole proprietorship is easier than transferring ownership of a corporation. 
D) A sole proprietorship is taxed the same as a C corporation. 
E) It is easy to create a sole proprietorship. 
A) The life of a sole proprietorship is potentially unlimited. 
B) A sole proprietor can generally raise large sums of capital quite easily. 
C) Transferring ownership of a sole proprietorship is easier than transferring ownership of a corporation. 
D) A sole proprietorship is taxed the same as a C corporation. 
E) It is easy to create a sole proprietorship.

Question 12

Sally and Alicia currently are general partners in a business located in Atlanta,Georgia.They are content with their current tax situation but are both very uncomfortable with the unlimited liability to which they are each subjected.Which form of business entity should they consider to replace their general partnership assuming they wish to remain the only two owners of their business? Whichever organization they select,they wish to be treated equally.

Accepted Answer

A) sole proprietorship 
B) joint stock company 
C) limited partnership 
D) limited liability company 
E) corporation 
A) sole proprietorship 
B) joint stock company 
C) limited partnership 
D) limited liability company 
E) corporation

Question 13

Which one of the following correctly defines the upward chain of command in a typical corporate organizational structure?

Accepted Answer

A) The vice president of finance reports to the chairman of the board. 
B) The chief executive officer reports to president. 
C) The controller reports to the president. 
D) The treasurer reports to the vice president of finance. 
E) The chief operations officer reports to the vice president of production. 
A) The vice president of finance reports to the chairman of the board. 
B) The chief executive officer reports to president. 
C) The controller reports to the president. 
D) The treasurer reports to the vice president of finance. 
E) The chief operations officer reports to the vice president of production.

Question 14

Shareholder A sold 500 shares of ABC stock on the New York Stock Exchange.This transaction:

Accepted Answer

A) took place in the primary market. 
B) occurred in a dealer market. 
C) was facilitated in the secondary market. 
D) involved a proxy. 
E) was a private placement. 
A) took place in the primary market. 
B) occurred in a dealer market. 
C) was facilitated in the secondary market. 
D) involved a proxy. 
E) was a private placement.

Question 15

Which form of business structure is most associated with agency problems?

Accepted Answer

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

Question 16

Which one of the following is a means by which shareholders can replace company management?

Accepted Answer

A) stock options 
B) promotion 
C) Sarbanes-Oxley Act 
D) agency play 
E) proxy fight 
A) stock options 
B) promotion 
C) Sarbanes-Oxley Act 
D) agency play 
E) proxy fight

Question 17

A firm which opts to "go dark" in response to the Sarbanes-Oxley Act:

Accepted Answer

A) must continue to provide audited financial statements to the public. 
B) must continue to provide a detailed list of internal control deficiencies on an annual basis. 
C) can provide less information to its shareholders than it did prior to "going dark". 
D) can continue publicly trading its stock but only on the exchange on which it was previously listed. 
E) ceases to exist. 
A) must continue to provide audited financial statements to the public. 
B) must continue to provide a detailed list of internal control deficiencies on an annual basis. 
C) can provide less information to its shareholders than it did prior to "going dark". 
D) can continue publicly trading its stock but only on the exchange on which it was previously listed. 
E) ceases to exist.

Question 18

What concerns might a loan officer have when loaning funds to a sole proprietorship that he or she might not have when loaning funds to a corporation?

Accepted Answer

The existence and viability of a sole pr

Question 19

Which type of business organization has all the respective rights and privileges of a legal person?

Accepted Answer

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

Question 20

Which of the following individuals have unlimited liability based on their ownership interest?
I.general partner
II.sole proprietor
III.stockholder
IV.limited partner

Accepted Answer

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

Exam 1: Introduction to Corporate Finance

A business partner whose potential financial loss in the partnership will not exceed his or her investment in that partnership is called a:

Which one of the following best states the primary goal of financial management?

Which one of the following terms is defined as the mixture of a firm's debt and equity financing?

Which one of the following statements is correct concerning the NYSE?

Which one of the following business types is best suited to raising large amounts of capital?

From a liability point of view,what is the difference between investing in a sole proprietorship and a general partnership?

Which of the following accounts are included in working capital management? I.accounts payable II.accounts receivable III.fixed assets IV.inventory

Which one of the following is defined as a firm's short-term assets and its short-term liabilities?

The Sarbanes-Oxley Act of 2002 is a governmental response to:

Why are so many businesses structured as sole proprietorships when the corporate form of business offers more advantages?

Which one of the following statements concerning a sole proprietorship is correct?

Which one of the following correctly defines the upward chain of command in a typical corporate organizational structure?

Shareholder A sold 500 shares of ABC stock on the New York Stock Exchange.This transaction:

Which form of business structure is most associated with agency problems?

Which one of the following is a means by which shareholders can replace company management?

A firm which opts to "go dark" in response to the Sarbanes-Oxley Act:

What concerns might a loan officer have when loaning funds to a sole proprietorship that he or she might not have when loaning funds to a corporation?

Which type of business organization has all the respective rights and privileges of a legal person?

Which of the following individuals have unlimited liability based on their ownership interest? I.general partner II.sole proprietor III.stockholder IV.limited partner

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

Filters