Question 1

What are the terms for the two types of prices quoted for a stock on an exchange?

Accepted Answer

The two quotes assoc

Question 2

What is the principal guiding factor for the financial manager of a firm?

Accepted Answer

Maximizing stockhold

Question 3

What is the general relation of the two types of prices quoted for a stock on a exchange?

Accepted Answer

The two prices are bid price and ask pri

Question 4

Investments by wealthy individuals and endowments is a major source of money for each of the following EXCEPT ________.

Accepted Answer

A) private equity funds 
B) hedge funds 
C) venture capital funds 
D) mutual funds 
A) private equity funds 
B) hedge funds 
C) venture capital funds 
D) mutual funds

Question 5

Use the figure for the question(s)below.  
-Based on the information shown above, how much would you receive from selling 2,000 shares of the above stock?

Accepted Answer

A) €40,840 
B) €40,740 
C) €41,000 
D) €42,560 
A) €40,840 
B) €40,740 
C) €41,000 
D) €42,560

Question 6

Use the figure for the question(s)below.  
-Using the above information, how much would you pay for a share of BHP Billiton stock?

Accepted Answer

A) $41.91 
B) $41.93 
C) $41.65 
D) $41.59 
A) $41.91 
B) $41.93 
C) $41.65 
D) $41.59

Question 7

Why in general do financial managers make financial decisions in a corporation, rather than the owners making these decisions themselves?

Accepted Answer

A) It is best for the control of the finances of a corporation to be in the hands of a disinterested third party. 
B) The interests of the various owners may conflict with each other. 
C) The owners may not be U.S. citizens or residents. 
D) There are often many owners, and they can often change as they buy and sell stock. 
A) It is best for the control of the finances of a corporation to be in the hands of a disinterested third party. 
B) The interests of the various owners may conflict with each other. 
C) The owners may not be U.S. citizens or residents. 
D) There are often many owners, and they can often change as they buy and sell stock.

Question 8

Why is it difficult to determine the market price of a private corporation's shares at any point in time?

Accepted Answer

A) It is difficult to obtain enough information to accurately value such a company. 
B) The price of its shares is fixed by the owners. 
C) It has a limited number of owners. 
D) There is no organized market for its shares. 
A) It is difficult to obtain enough information to accurately value such a company. 
B) The price of its shares is fixed by the owners. 
C) It has a limited number of owners. 
D) There is no organized market for its shares.

Question 9

The principal goal of a financial manager is to maximize the wealth of the stockholders.

Accepted Answer

A) True 
 B)False

Question 10

What is the bid-ask spread?

Accepted Answer

A) the difference in price available for an immediate sale of a stock and the immediate purchase of the stock 
B) all of the costs and fees that a stock exchange charges in order to process a transaction 
C) the rise or fall in the value of a stock between the time it is acquired by an investor and sold by that investor 
D) the difference in the selling price of a stock between different exchanges 
A) the difference in price available for an immediate sale of a stock and the immediate purchase of the stock 
B) all of the costs and fees that a stock exchange charges in order to process a transaction 
C) the rise or fall in the value of a stock between the time it is acquired by an investor and sold by that investor 
D) the difference in the selling price of a stock between different exchanges

Question 11

Which of the following people may not manage the operations of a firm in which they are part or full owners?

Accepted Answer

A) stockholders in S corporations 
B) stockholders in C corporations 
C) limited partners in a limited partnership 
D) general partners in a limited partnership 
A) stockholders in S corporations 
B) stockholders in C corporations 
C) limited partners in a limited partnership 
D) general partners in a limited partnership

Question 12

Briefly discuss the issues in the agency conflict problem.

Accepted Answer

The agency conflict problem arises out o

Question 13

Partnerships are the most common type of business firms in the world.

Accepted Answer

A) True 
 B)False

Question 14

What are the main differences between a partnership and a sole proprietorship?

Accepted Answer

While a sole proprietor has the same ide

Question 15

A C corporation earns $8.30 per share before taxes and the company pays a dividend of $4.00 per share. The corporate tax rate is 39%, the personal tax rate on dividends is 15%, and the personal tax rate on non-dividend income is 36%. What is the after-tax amount an individual would receive from the dividend?

Accepted Answer

A) $2.72 
B) $4.08 
C) $4.76 
D) $3.40 
A) $2.72 
B) $4.08 
C) $4.76 
D) $3.40

Question 16

An S corporation earns $9.10 per share before taxes. The corporate tax rate is 39%, the personal tax rate on dividends is 15%, and the personal tax rate on non-dividend income is 36%. What is the total amount of taxes paid if the company pays a $5.00 dividend?

Accepted Answer

A) $3.28 
B) $3.93 
C) $2.62 
D) $4.59 
A) $3.28 
B) $3.93 
C) $2.62 
D) $4.59

Question 17

A C corporation earns $4.30 per share before taxes. The corporate tax rate is 35%, the personal tax rate on dividends is 20%, and the personal tax rate on non-dividend income is 39%. What is the total amount of taxes paid if the company pays a $3.00 dividend?

Accepted Answer

A) $1.68 
B) $2.53 
C) $2.11 
D) $2.95 
A) $1.68 
B) $2.53 
C) $2.11 
D) $2.95

Question 18

You are a shareholder in a corporation which has elected subchapter S tax treatment. The corporation announces a profit of $6 per share, of which it retains $1 for reinvestment and distributes the rest as dividend payments. Given that the personal tax rate is 35%, how much tax must you pay per share?

Accepted Answer

A) $0 
B) $2.10 
C) $1.75 
D) $2.52 
A) $0 
B) $2.10 
C) $1.75 
D) $2.52

Question 19

Stock markets provide liquidity for a firm's shares.

Accepted Answer

A) True 
 B)False

Question 20

What is the term for the applicable price that I will pay, if I have to buy a stock?

Accepted Answer

The buyer of a stock

Exam 1: Corporate Finance and the Financial Manager

What are the terms for the two types of prices quoted for a stock on an exchange?

What is the principal guiding factor for the financial manager of a firm?

What is the general relation of the two types of prices quoted for a stock on a exchange?

Investments by wealthy individuals and endowments is a major source of money for each of the following EXCEPT ________.

Use the figure for the question(s)below. -Based on the information shown above, how much would you receive from selling 2,000 shares of the above stock?

Use the figure for the question(s)below. -Using the above information, how much would you pay for a share of BHP Billiton stock?

Why in general do financial managers make financial decisions in a corporation, rather than the owners making these decisions themselves?

Why is it difficult to determine the market price of a private corporation's shares at any point in time?

The principal goal of a financial manager is to maximize the wealth of the stockholders.

What is the bid-ask spread?

Which of the following people may not manage the operations of a firm in which they are part or full owners?

Briefly discuss the issues in the agency conflict problem.

Partnerships are the most common type of business firms in the world.

What are the main differences between a partnership and a sole proprietorship?

An S corporation earns $9.10 per share before taxes. The corporate tax rate is 39%, the personal tax rate on dividends is 15%, and the personal tax rate on non-dividend income is 36%. What is the total amount of taxes paid if the company pays a $5.00 dividend?

A C corporation earns $4.30 per share before taxes. The corporate tax rate is 35%, the personal tax rate on dividends is 20%, and the personal tax rate on non-dividend income is 39%. What is the total amount of taxes paid if the company pays a $3.00 dividend?

Stock markets provide liquidity for a firm's shares.

What is the term for the applicable price that I will pay, if I have to buy a stock?

Introduction to Financial Statement Analysis

Time Value of Money: an Introduction

Time Value of Money: Valuing Cash Flow Streams

Interest Rates

Bonds

Stock Valuation

Investment Decision Rules

Fundamentals of Capital Budgeting

Stock Valuation: a Second Look

Risk and Return in Capital Markets

Systematic Risk and the Equity Risk Premium

The Cost of Capital

Raising Equity Capital

Debt Financing

Capital Structure

Payout Policy

Financial Modeling and Pro Forma Analysis

Working Capital Management

Short-Term Financial Planning

Option Applications and Corporate Finance

Mergers and Acquisitions

International Corporate Finance

Leasing

Insurance and Risk Management

Corporate Governance

Filters