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?

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(Multiple Choice)

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Question 1

Correct Answer:

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It is generally not the duty of financial managers to ensure that a firm has the cash it needs for day-to-day transactions.

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(True/False)

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Question 2

Correct Answer:

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False

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

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(Essay)

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Question 3

Correct Answer:

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A corporation has a separate legal identity from those of its owners. This separation gives the owners limited liability for the actions of the corporation. The down side is that each dollar earned by the corporation is taxed twice, once when it is earned by the corporation and subsequently when it is passed on to the owners.

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?

(Multiple Choice)

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Question 4

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

(Multiple Choice)

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Question 5

A sole proprietorship is owned by ________.

(Multiple Choice)

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Question 6

A C corporation earns $8.30 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 $6.00 dividend?

(Multiple Choice)

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Question 7

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

(True/False)

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Question 8

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

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Question 9

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

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Question 10

Which of the stock markets listed below is the smallest, as judged by trading volume?

(Multiple Choice)

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Question 11

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?

(Multiple Choice)

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Question 12

What is the major way in which the roles and obligations of the owners of a limited liability company differ from the roles and obligations of limited partners in a limited partnership?

(Multiple Choice)

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Question 13

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?

(Multiple Choice)

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Question 14

Which of the following is unique for an S corporation?

(Multiple Choice)

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Question 15

A typical company has many types of shareholders, from individuals holding a few shares, to large institutions that hold very large numbers of shares. How does a financial manager ensure that the priorities and concerns of such disparate stockholders are met?

(Multiple Choice)

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Question 16

Which of the following best describes why the Valuation Principle is a key concept in making financial decisions?

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Question 17

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

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Question 18

What is the most important duty of a firm's financial officer?

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Question 19

Put the following steps of the financial cycle in the correct order. I. Money flows to companies who use it to fund growth through new products. II. People invest and save their money. III. Money flows back to savers and investors.

(Multiple Choice)

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Question 20

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Exam 1: Corporate Finance and the Financial Manager

It is generally not the duty of financial managers to ensure that a firm has the cash it needs for day-to-day transactions.

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

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?

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

A sole proprietorship is owned by ________.

A C corporation earns $8.30 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 $6.00 dividend?

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

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

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

Which of the stock markets listed below is the smallest, as judged by trading volume?

What is the major way in which the roles and obligations of the owners of a limited liability company differ from the roles and obligations of limited partners in a limited partnership?

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?

Which of the following is unique for an S corporation?

A typical company has many types of shareholders, from individuals holding a few shares, to large institutions that hold very large numbers of shares. How does a financial manager ensure that the priorities and concerns of such disparate stockholders are met?

Which of the following best describes why the Valuation Principle is a key concept in making financial decisions?

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

What is the most important duty of a firm's financial officer?

Put the following steps of the financial cycle in the correct order. I. Money flows to companies who use it to fund growth through new products. II. People invest and save their money. III. Money flows back to savers and investors.

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

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