Question 1

Maximizing owners' equity value means carefully considering all of the following EXCEPT:

Accepted Answer

A) how to best bring additional funds into the firm. 
B) which projects to invest in. 
C) how best to increase the firm's risk. 
D) how best to return the profits from those projects to the owners over time. 
A) how to best bring additional funds into the firm. 
B) which projects to invest in. 
C) how best to increase the firm's risk. 
D) how best to return the profits from those projects to the owners over time.

Question 2

Methods to minimize agency problem include all EXCEPT:

Accepted Answer

A) offer the managers an equity stake in the firm. 
B) award the CEO stock options. 
C) allow the CEO to purchase stock via an employee stock option plan. 
D) allow the CEO to purchase bonds via an employee bond option plan. 
A) offer the managers an equity stake in the firm. 
B) award the CEO stock options. 
C) allow the CEO to purchase stock via an employee stock option plan. 
D) allow the CEO to purchase bonds via an employee bond option plan.

Question 3

These individuals examine the firm's accounting systems and comment on whether financial statements fairly represent the firm's financial position.

Accepted Answer

A) Accounting departments 
B) Chief financial officers 
C) Board of directors 
D) Auditors 
A) Accounting departments 
B) Chief financial officers 
C) Board of directors 
D) Auditors

Question 4

All of the following are advantages to organizing as a corporation EXCEPT:

Accepted Answer

A) limited liability. 
B) double taxation. 
C) easy access to capital. 
D) easy to transfer ownership. 
A) limited liability. 
B) double taxation. 
C) easy access to capital. 
D) easy to transfer ownership.

Question 5

The most common type of business in the United States is the:

Accepted Answer

A) corporation. 
B) partnership. 
C) sole proprietorship. 
D) hybrid organization such as a limited liability company. 
A) corporation. 
B) partnership. 
C) sole proprietorship. 
D) hybrid organization such as a limited liability company.

Question 6

These individuals follow a firm,conduct their own evaluations of the company's business activities,and report to the investment community.

Accepted Answer

A) Auditors 
B) Investment analysts 
C) Investment bankers 
D) Credit analysts 
A) Auditors 
B) Investment analysts 
C) Investment bankers 
D) Credit analysts

Question 7

Agency problems exist in which forms of business ownership?

Accepted Answer

A) Sole proprietorship 
B) S corporation 
C) Partnership 
D) Corporation 
A) Sole proprietorship 
B) S corporation 
C) Partnership 
D) Corporation

Question 8

Outside parties that monitor the firm include all of the following EXCEPT:

Accepted Answer

A) credit agencies. 
B) the New York Stock Exchange. 
C) analysts. 
D) bankers. 
A) credit agencies. 
B) the New York Stock Exchange. 
C) analysts. 
D) bankers.

Question 9

Corporate stakeholders include all of the following EXCEPT:

Accepted Answer

A) employees. 
B) shareholders. 
C) suppliers. 
D) auditors. 
A) employees. 
B) shareholders. 
C) suppliers. 
D) auditors.

Question 10

What is the difference in perspective between finance and accounting?

Accepted Answer

A) Timing 
B) Risk 
C) Liability 
D) Ownership 
A) Timing 
B) Risk 
C) Liability 
D) Ownership

Question 11

Not all cash a company generates will be returned to the investors.Which of the following will NOT reduce the amount of capital returned to the investors?

Accepted Answer

A) Retained earnings 
B) Taxes 
C) Dividends 
D) None of these will reduce the amount of capital returned to the investors. 
A) Retained earnings 
B) Taxes 
C) Dividends 
D) None of these will reduce the amount of capital returned to the investors.

Question 12

Which of the following can create ethical dilemmas between corporate managers and stockholders?

Accepted Answer

A) Agency relationship 
B) Auditors 
C) Boards of directors 
D) Venture capitalist 
A) Agency relationship 
B) Auditors 
C) Boards of directors 
D) Venture capitalist

Question 13

Which of the following statements is correct?

Accepted Answer

A) Sole proprietorships are easy to start. 
B) If the sole proprietorship gets sued, the owner is not liable. 
C) It is relatively easy for sole proprietorships to raise money. 
D) Profits from the sole proprietorship are subject to double taxation. 
A) Sole proprietorships are easy to start. 
B) If the sole proprietorship gets sued, the owner is not liable. 
C) It is relatively easy for sole proprietorships to raise money. 
D) Profits from the sole proprietorship are subject to double taxation.

Question 14

In the financial crisis that started in 2006,a significant indicator of the U.S.economic decline was:

Accepted Answer

A) a significant drop in interest rates. 
B) a sharp increase in unregulated Ponzi-type security sales. 
C) rising defaults by subprime mortgage borrowers. 
D) a large increase in loan default due to unemployment. 
A) a significant drop in interest rates. 
B) a sharp increase in unregulated Ponzi-type security sales. 
C) rising defaults by subprime mortgage borrowers. 
D) a large increase in loan default due to unemployment.

Question 15

Which of the following statements is incorrect?

Accepted Answer

A) Partnerships have unlimited liability. 
B) Most sole proprietors raise money by borrowing from banks. 
C) An advantage of sole proprietorships is that the owner has complete control. 
D) S corporations are considered a hybrid organization. 
A) Partnerships have unlimited liability. 
B) Most sole proprietors raise money by borrowing from banks. 
C) An advantage of sole proprietorships is that the owner has complete control. 
D) S corporations are considered a hybrid organization.

Question 16

Which of the following is an example of aligning managers' personal interests with those of the owners?

Accepted Answer

A) Allow the managers to have as many perks as they request. 
B) Pay the managers high salaries. 
C) Offer the managers an equity stake in the firm. 
D) Trust the managers' actions as they will always act in the owners' best interest. 
A) Allow the managers to have as many perks as they request. 
B) Pay the managers high salaries. 
C) Offer the managers an equity stake in the firm. 
D) Trust the managers' actions as they will always act in the owners' best interest.

Question 17

Individuals who provide small amounts of capital and expert business advice to small firms in exchange for an ownership stake in the firm are referred to as:

Accepted Answer

A) institutional investors. 
B) corporate investors. 
C) angel investors. 
D) capital investors. 
A) institutional investors. 
B) corporate investors. 
C) angel investors. 
D) capital investors.

Question 18

This subarea of finance helps facilitate the capital flows between investors and companies.

Accepted Answer

A) Investments 
B) Financial management 
C) Treasury management 
D) Financial institutions and markets 
A) Investments 
B) Financial management 
C) Treasury management 
D) Financial institutions and markets

Question 19

The biggest disadvantage of the sole proprietorship is:

Accepted Answer

A) unlimited liability. 
B) double taxation. 
C) limited access to capital. 
D) total control. 
A) unlimited liability. 
B) double taxation. 
C) limited access to capital. 
D) total control.

Question 20

Which statement is incorrect regarding hybrid organizations?

Accepted Answer

A) They offer single taxation. 
B) They offer limited risk to the owners. 
C) They offer the same type of control as a sole proprietorship. 
D) All of these answers are correct statements. 
A) They offer single taxation. 
B) They offer limited risk to the owners. 
C) They offer the same type of control as a sole proprietorship. 
D) All of these answers are correct statements.

Maximizing owners' equity value means carefully considering all of the following EXCEPT:

Methods to minimize agency problem include all EXCEPT:

These individuals examine the firm's accounting systems and comment on whether financial statements fairly represent the firm's financial position.

All of the following are advantages to organizing as a corporation EXCEPT:

The most common type of business in the United States is the:

These individuals follow a firm,conduct their own evaluations of the company's business activities,and report to the investment community.

Agency problems exist in which forms of business ownership?

Outside parties that monitor the firm include all of the following EXCEPT:

Corporate stakeholders include all of the following EXCEPT:

What is the difference in perspective between finance and accounting?

Not all cash a company generates will be returned to the investors.Which of the following will NOT reduce the amount of capital returned to the investors?

Which of the following can create ethical dilemmas between corporate managers and stockholders?

Which of the following statements is correct?

In the financial crisis that started in 2006,a significant indicator of the U.S.economic decline was:

Which of the following statements is incorrect?

Which of the following is an example of aligning managers' personal interests with those of the owners?

Individuals who provide small amounts of capital and expert business advice to small firms in exchange for an ownership stake in the firm are referred to as:

This subarea of finance helps facilitate the capital flows between investors and companies.

The biggest disadvantage of the sole proprietorship is:

Which statement is incorrect regarding hybrid organizations?

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money

Time Value of Money

Valuing Bonds

Valuing Stockspart

Characterizing Risk and Return

Estimating Risk and Return

Calculating the Cost of Capital

Estimating Cash Flows on Capital Budgeting Projects

Weighing Net Present Value and Other Capital Budgeting Criteria

Working Capital and Policies

Financial Planning and Forecasting

Assessing Long-Term Debt, equity, and Capital Structure

Sharing Firm Wealth: Dividends, share Repurchases and Other Payouts

Issuing Capital and the Investment Banking Process

International Corporate Finance

Mergers and Acquisitions and Financial Distress

Filters

Exam 1: Introduction to Financial Management

Maximizing owners' equity value means carefully considering all of the following EXCEPT:

Methods to minimize agency problem include all EXCEPT:

These individuals examine the firm's accounting systems and comment on whether financial statements fairly represent the firm's financial position.

All of the following are advantages to organizing as a corporation EXCEPT:

The most common type of business in the United States is the:

These individuals follow a firm,conduct their own evaluations of the company's business activities,and report to the investment community.

Agency problems exist in which forms of business ownership?

Outside parties that monitor the firm include all of the following EXCEPT:

Corporate stakeholders include all of the following EXCEPT:

What is the difference in perspective between finance and accounting?

Not all cash a company generates will be returned to the investors.Which of the following will NOT reduce the amount of capital returned to the investors?

Which of the following can create ethical dilemmas between corporate managers and stockholders?

Which of the following statements is correct?

In the financial crisis that started in 2006,a significant indicator of the U.S.economic decline was:

Which of the following statements is incorrect?

Which of the following is an example of aligning managers' personal interests with those of the owners?

Individuals who provide small amounts of capital and expert business advice to small firms in exchange for an ownership stake in the firm are referred to as:

This subarea of finance helps facilitate the capital flows between investors and companies.

The biggest disadvantage of the sole proprietorship is:

Which statement is incorrect regarding hybrid organizations?

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money

Time Value of Money

Valuing Bonds

Valuing Stockspart

Characterizing Risk and Return

Estimating Risk and Return

Calculating the Cost of Capital

Estimating Cash Flows on Capital Budgeting Projects

Weighing Net Present Value and Other Capital Budgeting Criteria

Working Capital and Policies

Financial Planning and Forecasting

Assessing Long-Term Debt, equity, and Capital Structure

Sharing Firm Wealth: Dividends, share Repurchases and Other Payouts

Issuing Capital and the Investment Banking Process

International Corporate Finance

Mergers and Acquisitions and Financial Distress

Filters