Question 1

Which of the following is the difficulty in forming a Subchapter S Corporation?

Accepted Answer

A) The owners cannot be residents of the United States. 
B) There can be no more than 75 owners. 
C) The stock must have a very low par value. 
D) The company must promise to pay dividends quarterly. 
A) The owners cannot be residents of the United States. 
B) There can be no more than 75 owners. 
C) The stock must have a very low par value. 
D) The company must promise to pay dividends quarterly. B

Question 2

Which of the following is the best description of how McDonald's created value for their owners in the breakfast market?

Accepted Answer

A) They generated additional revenues without increasing fixed costs. 
B) They invented the Egg McMuffin. 
C) They saved money by using the drive-through window. 
D) The employees wear headsets so they can communicate to each other directly. 
A) They generated additional revenues without increasing fixed costs. 
B) They invented the Egg McMuffin. 
C) They saved money by using the drive-through window. 
D) The employees wear headsets so they can communicate to each other directly. A

Question 3

The goal of hospitality financial management is to maximize the wealth of the owners.

Accepted Answer

A) True 
 B)False  True

Question 4

The shareholders of a corporation have unlimited liability.

Accepted Answer

A) True 
 B)False

Question 5

The most common form of business organization in the United States is the sole proprietorship.

Accepted Answer

A) True 
 B)False

Question 6

A good example of an agency relationship in a hotel is the relationship between a bartender and a server.

Accepted Answer

A) True 
 B)False

Question 7

Financial management is the process of classifying financial information.

Accepted Answer

A) True 
 B)False

Question 8

You are the owner of a Comfort Inn and would like to hire a new general manager. In terms of preventing possible agency problems, what should you include in your offer?

Accepted Answer

A) a very high fixed salary 
B) a fancy office with a private secretary 
C) a 37-hour workweek 
D) profit sharing 
A) a very high fixed salary 
B) a fancy office with a private secretary 
C) a 37-hour workweek 
D) profit sharing

Question 9

Preferred stock is a security that has the features of both debt and equity.

Accepted Answer

A) True 
 B)False

Question 10

Value is created if a project's

Accepted Answer

A) incremental costs exceed incremental benefits. 
B) incremental costs equal incremental benefits. 
C) incremental benefits exceed incremental costs. 
D) none of the above. 
A) incremental costs exceed incremental benefits. 
B) incremental costs equal incremental benefits. 
C) incremental benefits exceed incremental costs. 
D) none of the above.

Question 11

Financial management cannot be related to other functional areas of management such as marketing.

Accepted Answer

A) True 
 B)False

Question 12

If you wanted to take actions to maximize value for the owners, which of the following actions would be the most effective?

Accepted Answer

A) raising prices 
B) maximizing revenue 
C) cutting costs such as advertising and training 
D) none of the above 
A) raising prices 
B) maximizing revenue 
C) cutting costs such as advertising and training 
D) none of the above

Question 13

A value-creating innovation of Marriott was

Accepted Answer

A) having restaurants in their hotels. 
B) guest rewards program. 
C) hotel swimming pools. 
D) exercise rooms. 
A) having restaurants in their hotels. 
B) guest rewards program. 
C) hotel swimming pools. 
D) exercise rooms.

Question 14

The three major decisions of financial management involve

Accepted Answer

A) investing, financing, and payment of dividends. 
B) investing, reporting, and financing. 
C) financing, diversifying, and payment of dividends. 
D) investing, classifying, and financing. 
A) investing, financing, and payment of dividends. 
B) investing, reporting, and financing. 
C) financing, diversifying, and payment of dividends. 
D) investing, classifying, and financing.

Question 15

Which of the following makes preferred stock different from common stock?

Accepted Answer

A) Common stockholders receive dividends. 
B) Common stockholders get paid after the bondholders. 
C) Common stockholders can vote for the board of directors. 
D) Dividends to common stockholders are tax deductible. 
A) Common stockholders receive dividends. 
B) Common stockholders get paid after the bondholders. 
C) Common stockholders can vote for the board of directors. 
D) Dividends to common stockholders are tax deductible.

Question 16

The three major decisions in financial management involve investing, financing, and the payment of dividends.

Accepted Answer

A) True 
 B)False

Question 17

The best way to address agency problems is

Accepted Answer

A) always hire your friends. 
B) design the initial contract properly with appropriate incentives. 
C) hire an attorney and threaten the agent with a lawsuit. 
D) have the principal and agent go through arbitration. 
A) always hire your friends. 
B) design the initial contract properly with appropriate incentives. 
C) hire an attorney and threaten the agent with a lawsuit. 
D) have the principal and agent go through arbitration.

Question 18

The goal of wealth maximization for the owners makes sense for the firm because

Accepted Answer

A) the owners always know what is best for themselves. 
B) the lenders really don't have the right to make decisions. 
C) the owners will fire all the employees otherwise. 
D) if we have satisfied the owners, we have satisfied all other parties as well. 
A) the owners always know what is best for themselves. 
B) the lenders really don't have the right to make decisions. 
C) the owners will fire all the employees otherwise. 
D) if we have satisfied the owners, we have satisfied all other parties as well.

Question 19

Agency problems arise because

Accepted Answer

A) some people just don't get along. 
B) the principal is shirking from her responsibility. 
C) people usually act in their own best interest. 
D) you can never make much money working for someone else. 
A) some people just don't get along. 
B) the principal is shirking from her responsibility. 
C) people usually act in their own best interest. 
D) you can never make much money working for someone else.

Question 20

Shirking is considered an agency problem.

Accepted Answer

A) True 
 B)False

Which of the following is the difficulty in forming a Subchapter S Corporation?

Which of the following is the best description of how McDonald's created value for their owners in the breakfast market?

The goal of hospitality financial management is to maximize the wealth of the owners.

The shareholders of a corporation have unlimited liability.

The most common form of business organization in the United States is the sole proprietorship.

A good example of an agency relationship in a hotel is the relationship between a bartender and a server.

Financial management is the process of classifying financial information.

You are the owner of a Comfort Inn and would like to hire a new general manager. In terms of preventing possible agency problems, what should you include in your offer?

Preferred stock is a security that has the features of both debt and equity.

Value is created if a project's

Financial management cannot be related to other functional areas of management such as marketing.

If you wanted to take actions to maximize value for the owners, which of the following actions would be the most effective?

A value-creating innovation of Marriott was

The three major decisions of financial management involve

Which of the following makes preferred stock different from common stock?

The three major decisions in financial management involve investing, financing, and the payment of dividends.

The best way to address agency problems is

The goal of wealth maximization for the owners makes sense for the firm because

Agency problems arise because

Shirking is considered an agency problem.

Financial Markets and Financial Instruments

Review of Financial Statements and Selected Ratios

The Relationship Between Risk and Return

Time Value of Money

Fixed Income Securities: Bonds and Preferred Stock

Common Stock

Cost of Capital

Introduction to Capital Budgeting and Cash Flow Estimation

Capital Budgeting Decision Methods

An Introduction to Hotel Valuation

Capital Structure

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Exam 1: Introduction

Which of the following is the difficulty in forming a Subchapter S Corporation?

Which of the following is the best description of how McDonald's created value for their owners in the breakfast market?

The goal of hospitality financial management is to maximize the wealth of the owners.

The shareholders of a corporation have unlimited liability.

The most common form of business organization in the United States is the sole proprietorship.

A good example of an agency relationship in a hotel is the relationship between a bartender and a server.

Financial management is the process of classifying financial information.

You are the owner of a Comfort Inn and would like to hire a new general manager. In terms of preventing possible agency problems, what should you include in your offer?

Preferred stock is a security that has the features of both debt and equity.

Value is created if a project's

Financial management cannot be related to other functional areas of management such as marketing.

If you wanted to take actions to maximize value for the owners, which of the following actions would be the most effective?

A value-creating innovation of Marriott was

The three major decisions of financial management involve

Which of the following makes preferred stock different from common stock?

The three major decisions in financial management involve investing, financing, and the payment of dividends.

The best way to address agency problems is

The goal of wealth maximization for the owners makes sense for the firm because

Agency problems arise because

Shirking is considered an agency problem.

Financial Markets and Financial Instruments

Review of Financial Statements and Selected Ratios

The Relationship Between Risk and Return

Time Value of Money

Fixed Income Securities: Bonds and Preferred Stock

Common Stock

Cost of Capital

Introduction to Capital Budgeting and Cash Flow Estimation

Capital Budgeting Decision Methods

An Introduction to Hotel Valuation

Capital Structure

Filters