Chapter 1 Introduction to Corporate Finance
1.
|
Which one of the following terms is defined as the management of a firm's long-term investments?
Refer to section 1.1
|
AACSB: Analytic
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-01 The basic types of financial management decisions and the role of the financial manager. Section: 1.1 Topic: Capital budgeting |
2.
|
Which one of the following terms is defined as the mixture of a firm's debt and equity financing?
Refer to section 1.1
|
AACSB: Analytic
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-01 The basic types of financial management decisions and the role of the financial manager. Section: 1.1 Topic: Capital structure |
3.
|
Which one of the following is defined as a firm's short-term assets and its short-term liabilities?
Refer to section 1.1
|
AACSB: Analytic
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-01 The basic types of financial management decisions and the role of the financial manager. Section: 1.1 Topic: Working capital |
4.
|
A business owned by a solitary individual who has unlimited liability for its debt is called a:
Refer to section 1.2
|
AACSB: Analytic
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-03 The financial implications of the different forms of business organization. Section: 1.2 Topic: Sole proprietorship |
5.
|
A business formed by two or more individuals who each have unlimited liability for all of the firm's business debts is called a:
Refer to section 1.2
|
AACSB: Analytic
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-03 The financial implications of the different forms of business organization. Section: 1.2 Topic: General partnership |
6.
|
A business partner whose potential financial loss in the partnership will not exceed his or her investment in that partnership is called a:
Refer to section 1.2
|
AACSB: Analytic
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-03 The financial implications of the different forms of business organization. Section: 1.2 Topic: Limited partner |
7.
|
A business created as a distinct legal entity and treated as a legal "person" is called a:
Refer to section 1.2
|
AACSB: Analytic
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-03 The financial implications of the different forms of business organization. Section: 1.2 Topic: Corporation |
8.
|
Which one of the following terms is defined as a conflict of interest between the corporate shareholders and the corporate managers?
Refer to section 1.4
|
AACSB: Ethics
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-04 The conflicts of interest that can arise between managers and owners. Section: 1.4 Topic: Agency problem |
9.
|
A stakeholder is:
Refer to section 1.4
|
AACSB: Ethics
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-04 The conflicts of interest that can arise between managers and owners. Section: 1.4 Topic: Stakeholder |
10.
|
Which of the following questions are addressed by financial managers?
I. How should a product be marketed? II. Should customers be given 30 or 45 days to pay for their credit purchases? III. Should the firm borrow more money? IV. Should the firm acquire new equipment?
Refer to section 1.1
|
AACSB: Analytic
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-01 The basic types of financial management decisions and the role of the financial manager. Section: 1.1 Topic: Financial management |
11.
|
Which one of the following functions should be the responsibility of the controller rather than the treasurer?
Refer to section 1.1
|
AACSB: Analytic
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-01 The basic types of financial management decisions and the role of the financial manager. Section: 1.1 Topic: Financial management |
12.
|
The controller of a corporation generally reports directly to the:
Refer to section 1.1
|
AACSB: Analytic
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-01 The basic types of financial management decisions and the role of the financial manager. Section: 1.1 Topic: Corporate structure |
13.
|
Which one of the following correctly defines the upward chain of command in a typical corporate organizational structure?
Refer to section 1.1
|
AACSB: Analytic
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-01 The basic types of financial management decisions and the role of the financial manager. Section: 1.1 Topic: Corporate structure |
14.
|
Which one of the following is a capital budgeting decision?
Refer to section 1.1
|
AACSB: Analytic
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-01 The basic types of financial management decisions and the role of the financial manager. Section: 1.1 Topic: Capital budgeting |
15.
|
Which of the following should a financial manager consider when analyzing a capital budgeting project?
I. project start up costs II. timing of all projected cash flows III. dependability of future cash flows IV. dollar amount of each projected cash flow
Refer to section 1.1
|
AACSB: Analytic
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-01 The basic types of financial management decisions and the role of the financial manager. Section: 1.1 Topic: Capital budgeting |
16.
|
Which one of the following is a capital structure decision?
Refer to section 1.1
|
AACSB: Analytic
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-01 The basic types of financial management decisions and the role of the financial manager. Section: 1.1 Topic: Capital structure |
17.
|
The decision to issue additional shares of stock is an example of which one of the following?
Refer to section 1.1
|
AACSB: Analytic
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-01 The basic types of financial management decisions and the role of the financial manager. Section: 1.1 Topic: Capital structure |
18.
|
Which of the following accounts are included in working capital management?
I. accounts payable II. accounts receivable III. fixed assets IV. inventory
Refer to section 1.1
|
AACSB: Analytic
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-01 The basic types of financial management decisions and the role of the financial manager. Section: 1.1 Topic: Working capital management |
19.
|
Which one of the following is a working capital management decision?
Refer to section 1.1
|
AACSB: Analytic
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-01 The basic types of financial management decisions and the role of the financial manager. Section: 1.1 Topic: Working capital management |
20.
|
Which one of the following statements concerning a sole proprietorship is correct?
Refer to section 1.2
|
AACSB: Analytic
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-03 The financial implications of the different forms of business organization. Section: 1.2 Topic: Sole proprietorship |
21.
|
Which one of the following statements concerning a sole proprietorship is correct?
Refer to section 1.2
|
AACSB: Analytic
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-03 The financial implications of the different forms of business organization. Section: 1.2 Topic: Sole proprietorship |
22.
|
Which of the following individuals have unlimited liability based on their ownership interest?
I. general partner II. sole proprietor III. stockholder IV. limited partner
Refer to section 1.2
|
AACSB: Analytic
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-03 The financial implications of the different forms of business organization. Section: 1.2 Topic: Unlimited liability |
23.
|
Which one of the following best describes the primary advantage of being a limited partner instead of a general partner?
Refer to section 1.2
|
AACSB: Analytic
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-03 The financial implications of the different forms of business organization. Section: 1.2 Topic: Limited partner |
24.
|
A general partner:
Refer to section 1.2
|
AACSB: Analytic
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-03 The financial implications of the different forms of business organization. Section: 1.2 Topic: General partner |
25.
|
A limited partnership:
Refer to section 1.2
|
AACSB: Analytic
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-03 The financial implications of the different forms of business organization. Section: 1.2 Topic: Partnership |
26.
|
Which of the following apply to a partnership that consists solely of general partners?
I. double taxation of partnership profits II. limited partnership life III. active involvement in the firm by all the partners IV. unlimited personal liability for all partnership debts
Refer to section 1.2
|
AACSB: Analytic
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-03 The financial implications of the different forms of business organization. Section: 1.2 Topic: Partnership |
27.
|
Which of the following are advantages of the corporate form of business ownership?
I. limited liability for firm debt II. double taxation III. ability to raise capital IV. unlimited firm life
Refer to section 1.2
|
AACSB: Analytic
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-03 The financial implications of the different forms of business organization. Section: 1.2 Topic: Corporation |
28.
|
Which one of the following statements is correct?
Refer to section 1.2
|
AACSB: Analytic
Blooms: Understand Difficulty: 2 Medium Learning Objective: 01-03 The financial implications of the different forms of business organization. Section: 1.2 Topic: Corporation |
29.
|
Which one of the following statements is correct?
Refer to section 1.2
|
AACSB: Analytic
Blooms: Understand Difficulty: 2 Medium Learning Objective: 01-03 The financial implications of the different forms of business organization. Section: 1.2 Topic: Business entity |
30.
|
The articles of incorporation:
I. describe the purpose of the firm. II. are amended periodically. III. set forth the number of shares of stock that can be issued. IV. detail the method that will be used to elect corporate directors.
Refer to section 1.2
|
AACSB: Analytic
Blooms: Understand Difficulty: 2 Medium Learning Objective: 01-03 The financial implications of the different forms of business organization. Section: 1.2 Topic: Articles of incorporation |
31.
|
Corporate bylaws:
Refer to section 1.2
|
AACSB: Analytic
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-03 The financial implications of the different forms of business organization. Section: 1.2 Topic: Corporate bylaws |
32.
|
Which one of the following characteristics applies to a limited liability company?
Refer to section 1.2
|
AACSB: Analytic
Blooms: Understand Difficulty: 2 Medium Learning Objective: 01-03 The financial implications of the different forms of business organization. Section: 1.2 Topic: Limited liability company |
33.
|
Which one of the following business types is best suited to raising large amounts of capital?
Refer to section 1.2
|
AACSB: Analytic
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-03 The financial implications of the different forms of business organization. Section: 1.2 Topic: Corporation |
34.
|
Which type of business organization has all the respective rights and privileges of a legal person?
Refer to section 1.2
|
AACSB: Analytic
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-03 The financial implications of the different forms of business organization. Section: 1.2 Topic: Corporation |
35.
|
Sam, Alfredo, and Juan want to start a small U.S. business. Juan will fund the venture but wants to limit his liability to his initial investment and has no interest in the daily operations. Sam will contribute his full efforts on a daily basis but has limited funds to invest in the business. Alfredo will be involved as an active consultant and manager and will also contribute funds. Sam and Alfredo are willing to accept liability for the firm's debts as they feel they have nothing to lose by doing so. All three individuals will share in the firm's profits and wish to keep the initial organizational costs of the business to a minimum. Which form of business entity should these individuals adopt?
Refer to section 1.2
|
AACSB: Reflective Thinking
Blooms: Understand Difficulty: 2 Medium Learning Objective: 01-03 The financial implications of the different forms of business organization. Section: 1.2 Topic: Limited partnership |
36.
|
Sally and Alicia currently are general partners in a business located in Atlanta, Georgia. They are content with their current tax situation but are both very uncomfortable with the unlimited liability to which they are each subjected. Which form of business entity should they consider to replace their general partnership assuming they wish to remain the only two owners of their business? Whichever organization they select, they wish to be treated equally.
Refer to section 1.2
|
AACSB: Reflective Thinking
Blooms: Understand Difficulty: 2 Medium Learning Objective: 01-03 The financial implications of the different forms of business organization. Section: 1.2 Topic: Limited liability company |
37.
|
Which one of the following best states the primary goal of financial management?
Refer to section 1.3
|
AACSB: Analytic
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-02 The goal of financial management. Section: 1.3 Topic: Goal of financial management |
38.
|
Which one of the following best illustrates that the management of a firm is adhering to the goal of financial management?
Refer to section 1.3
|
AACSB: Analytic
Blooms: Understand Difficulty: 2 Medium Learning Objective: 01-02 The goal of financial management. Section: 1.3 Topic: Goal of financial management |
39.
|
Why should financial managers strive to maximize the current value per share of the existing stock?
Refer to section 1.3
|
AACSB: Analytic
Blooms: Understand Difficulty: 2 Medium Learning Objective: 01-02 The goal of financial management. Section: 1.3 Topic: Goal of financial management |
40.
|
Decisions made by financial managers should primarily focus on increasing which one of the following?
Refer to section 1.3
|
AACSB: Analytic
Blooms: Understand Difficulty: 2 Medium Learning Objective: 01-02 The goal of financial management. Section: 1.3 Topic: Goal of financial management |
41.
|
The Sarbanes-Oxley Act of 2002 is a governmental response to:
Refer to section 1.3
|
AACSB: Ethics
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-04 The conflicts of interest that can arise between managers and owners. Section: 1.3 Topic: Sarbox |
42.
|
Which one of the following is an unintended result of the Sarbanes-Oxley Act?
Refer to section 1.3
|
AACSB: Ethics
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-04 The conflicts of interest that can arise between managers and owners. Section: 1.3 Topic: Sarbox |
43.
|
A firm which opts to "go dark" in response to the Sarbanes-Oxley Act:
Refer to section 1.3
|
AACSB: Ethics
Blooms: Understand Difficulty: 2 Medium Learning Objective: 01-04 The conflicts of interest that can arise between managers and owners. Section: 1.3 Topic: Sarbox |
44.
|
Which of the following are results related to the enactment of the Sarbanes-Oxley Act of 2002?
I. increased foreign stock exchange listings of U.S. stocks II. decreased compliance costs III. increased privatization of public corporations IV. increased public disclosure by all corporations
Refer to section 1.3
|
AACSB: Ethics
Blooms: Understand Difficulty: 2 Medium Learning Objective: 01-04 The conflicts of interest that can arise between managers and owners. Section: 1.3 Topic: Sarbox |
45.
|
Which one of the following actions by a financial manager is most apt to create an agency problem?
Refer to section 1.4
|
AACSB: Ethics
Blooms: Understand Difficulty: 2 Medium Learning Objective: 01-04 The conflicts of interest that can arise between managers and owners. Section: 1.4 Topic: Agency problem |
46.
|
Which of the following help convince managers to work in the best interest of the stockholders? Assume there are no golden parachutes.
I. compensation based on the value of the stock II. stock option plans III. threat of a company takeover IV. threat of a proxy fight
Refer to section 1.4
|
AACSB: Ethics
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-04 The conflicts of interest that can arise between managers and owners. Section: 1.4 Topic: Agency problem |
47.
|
Which form of business structure is most associated with agency problems?
Refer to section 1.4
|
AACSB: Ethics
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-04 The conflicts of interest that can arise between managers and owners. Section: 1.4 Topic: Agency problem |
48.
|
Which one of the following is an agency cost?
Refer to section 1.4
|
AACSB: Ethics
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-04 The conflicts of interest that can arise between managers and owners. Section: 1.4 Topic: Agency cost |
49.
|
Which one of the following is least likely to be an agency problem?
Refer to section 1.4
|
AACSB: Ethics
Blooms: Understand Difficulty: 2 Medium Learning Objective: 01-04 The conflicts of interest that can arise between managers and owners. Section: 1.4 Topic: Agency cost |
50.
|
Which one of the following is a means by which shareholders can replace company management?
Refer to section 1.4
|
AACSB: Analytic
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-04 The conflicts of interest that can arise between managers and owners. Section: 1.4 Topic: Proxy fight |
51.
|
Which one of the following grants an individual the right to vote on behalf of a shareholder?
Refer to section 1.4
|
AACSB: Analytic
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-04 The conflicts of interest that can arise between managers and owners. Section: 1.4 Topic: Proxy |
52.
|
Which one of the following parties has ultimate control of a corporation?
Refer to section 1.4
|
AACSB: Analytic
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-04 The conflicts of interest that can arise between managers and owners. Section: 1.4 Topic: Corporate responsibility |
53.
|
Which of the following parties are considered stakeholders of a firm?
I. employee II. long-term creditor III. government IV. common stockholder
Refer to section 1.4
|
AACSB: Analytic
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-04 The conflicts of interest that can arise between managers and owners. Section: 1.4 Topic: Stakeholder |
54.
|
Which of the following represent cash outflows from a corporation?
I. issuance of securities II. payment of dividends III. new loan proceeds IV. payment of government taxes
Refer to section 1.5
|
AACSB: Analytic
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-03 The financial implications of the different forms of business organization. Section: 1.5 Topic: Cash outflows |
55.
|
Which of the following are cash flows from a corporation into the financial markets?
I. repayment of long-term debt II. payment of government taxes III. payment of loan interest IV. payment of quarterly dividend
Refer to section 1.5
|
AACSB: Analytic
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-03 The financial implications of the different forms of business organization. Section: 1.5 Topic: Cash flows |
56.
|
Which one of the following is a primary market transaction?
Refer to section 1.5
|
AACSB: Analytic
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-03 The financial implications of the different forms of business organization. Section: 1.5 Topic: Primary market |
57.
|
Shareholder A sold 500 shares of ABC stock on the New York Stock Exchange. This transaction:
Refer to section 1.5
|
AACSB: Analytic
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-03 The financial implications of the different forms of business organization. Section: 1.5 Topic: Secondary market |
58.
|
Public offerings of debt and equity must be registered with which one of the following?
Refer to section 1.5
|
AACSB: Analytic
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-03 The financial implications of the different forms of business organization. Section: 1.5 Topic: SEC |
59.
|
Which one of the following statements is generally correct?
Refer to section 1.5
|
AACSB: Analytic
Blooms: Understand Difficulty: 2 Medium Learning Objective: 01-03 The financial implications of the different forms of business organization. Section: 1.5 Topic: Auction and dealer markets |
60.
|
Which one of the following statements concerning stock exchanges is correct?
Refer to section 1.5
|
AACSB: Analytic
Blooms: Understand Difficulty: 2 Medium Learning Objective: 01-03 The financial implications of the different forms of business organization. Section: 1.5 Topic: NYSE and NASDAQ |
61.
|
Shareholder A sold shares of Maplewood Cabinets stock to Shareholder B. The stock is listed on the NYSE. This trade occurred in which one of the following?
Refer to section 1.5
|
AACSB: Analytic
Blooms: Understand Difficulty: 2 Medium Learning Objective: 01-03 The financial implications of the different forms of business organization. Section: 1.5 Topic: Secondary auction market |
62.
|
Which one of the following statements is correct concerning the NYSE?
Refer to section 1.5
|
AACSB: Analytic
Blooms: Understand Difficulty: 2 Medium Learning Objective: 01-03 The financial implications of the different forms of business organization. Section: 1.5 Topic: NYSE |
63.
|
Which one of the following statements concerning NASDAQ is FALSE?
Refer to section 1.5
|
AACSB: Analytic
Blooms: Understand Difficulty: 1 Easy Learning Objective: 01-03 The financial implications of the different forms of business organization. Section: 1.5 Topic: NASDAQ |
No comments:
Post a Comment