Exam 1: Corporate Finance and the Financial Manager

A ________ is when a rich individual or organization purchases a large fraction of the stock of a poorly performing firm and in doing so gets enough votes to replace the board of directors and the CEO.

A limited liability company is essentially ________.

Use the figure for the question(s) below. -Using the above information, how much would you receive if you sold a share of Washington Post stock?

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

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

Which of the following types of firms does NOT have limited liability?

Which of the following is NOT an advantage of a sole proprietorship?

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

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

Which of the following is a major duty of a financial manager? I. To make investment decisions

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?

An S corporation earns $6.00 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 $2.00 dividend?

Which of the following is NOT a function of the board of directors?

What is the bid-ask spread?

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

Use the figure for the question(s) below. -Based on the information shown above, what would it cost to buy 1,000 shares of the above stock?

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

Financial decisions require that you weigh alternatives in strictly monetary terms.

If broker will buy a share of stock from you at $3.85 and sell it to you at $3.87, the ask price would be $3.85.

On August 19, 2004 Google IPO offered 19,605,052 shares at a price of U.S. $85 per share, which were sold in an online auction in a bid to make the shares more widely available. Which of the following statements best describes why these are considered a primary market transaction?