Exam 1: Corporate Finance and the Financial Manager

A company that produces racing motorbikes has several models that sell well within the motorcycle racing community and which are very profitable for the company. Despite having a profitable product, why must this company take care to ensure that it has sufficient cash on hand to meet its obligations?

Which of the following would be more typically the responsibility of a controller rather than a treasurer?

Use the figure for the question(s)below. -What is the bid-ask spread on the stock shown above?

Which of the following is a major duty of a financial manager? I. To make investment decisions II. To make financing decisions III. To manage cash flow from operating activities

What is the most common type of firms in the United States and the world?

Use the figure for the question(s)below. -How much money would a stock exchange make from buying and selling 500 shares of the stock under the conditions shown above?

The financial manager of a well-regarded book publishing firm wishes to buy a small Internet publishing company to provide an avenue for sale of its materials online. In order to raise the funds to make this purchase, the financial manager decides to sell more stock in the company. How is the financial manager raising funds in this case?

Corporations have come to dominate the business world through their ability to raise large amounts of capital by sale of ownership shares to anonymous outside investors.

What is the term for the applicable price that the seller gets when he sells a stock on the exchange?

Why is the stock price of a company an indication of the performance of the company's senior managers?

Whose interests should a financial manager consider paramount when making a decision?

Helen owns 10.2% of the stock of the Median Corporation. If Median makes a dividend payment of $25,000,000 paid proportionally to its shareholders, how much of this amount would Helen receive, disregarding tax?

Explain some of the measures taken to reduce the agency conflict problem.

How is a corporation different from most of the other forms of business organizations?

In which of the following ways is a limited liability company like a corporation?

What is the major advantage corporations have over other business entities?

What are the main differences between the NYSE and NASDAQ stock markets?

The shares of private corporations are traded on a stock market.

A factory owner wants his workers to produce as many widgets as they can so he pays his workers based on how many widgets they produce. However, in order to make sure that the workers do not rush and produce a large number of poorly made widgets, he checks the widgets at random at various stages of their manufacture. If a defect is found in a widget, the pay of the entire section of the factory responsible for that defect is docked. How is this factory owner seeking to solve the agency conflict problem in this case?

A company's board of directors chooses to provide a comprehensive health care plan for the families of all employees, despite the large cost. They argue that this will not only increase the number of employees who stay with the firm, and thus reduce some costs involved in employee turnover, but also increase the employees' diligence and industry. What general principle is being argued by the board of directors?