Question 1

Which one of the following is an advantage of being a limited partner?

Accepted Answer

A)  Nontaxable share of any profits
B)  Control over the daily operations of the firm
C)  Losses limited to capital invested
D)  Unlimited profits without risk of incurring a loss
E)  Active market for ownership interestF) C) and D)
G) A) and C)

Question 2

Which one of the following applies to a general partnership?

Accepted Answer

A)  The firm's operations must be controlled by a single partner.
B)  Any one of the partners can be held solely liable for all of the partnership's debt.
C)  The profits of the firm are taxed as a separate entity.
D)  Each partner's liability for the firm's debts is limited to each partner's investment in the firm.
E)  The profits of a general partnership are taxed the same as those of a corporation.F) A) and C)
G) A) and E)

Question 3

Which of the following are advantages of the corporate form of organization?
I.Ability to raise large sums of equity capital
II.Ease of ownership transfer
III.Profits taxed at the corporate level
IV.Limited liability for all owners

Accepted Answer

A)  I and II only
B)  III and IV only
C)  II, III, and IV only
D)  I, II, and IV only
E)  I, II, III, and IVF) All of the above
G) None of the above

Question 4

The Sarbanes-Oxley Act:

Accepted Answer

A)  makes the officers of a public corporation personally responsible for the firm's financial statements.
B)  requires all corporations to fully disclose its financial dealings to the general public.
C)  places the responsibility for a firm's financial statements solely on the chief financial officer.
D)  requires that the board of directors be solely responsible for the firm's financial dealings.
E)  places total responsibility for the financial statements of a firm on the auditor who certifies the statements.F) C) and D)
G) A) and E)

Question 5

The "say on pay" portion of the Dodd-Frank Wall Street Reform and Consumer Protection Act requires corporations to do which one of the following?

Accepted Answer

A)  Give the chair of the board the final say on executive pay
B)  Give the firm's creditors a nonbinding say on executive pay
C)  Give the firm's creditors a binding say on executive pay
D)  Give shareholders a nonbinding vote on executive pay
E)  Give shareholders a binding vote on executive payF) D) and E)
G) C) and D)

Question 6

Working capital management includes which one of the following?

Accepted Answer

A)  Deciding which new projects to accept
B)  Deciding whether to purchase a new machine or fix a current machine
C)  Determining which customers will be granted credit
D)  Determining how many new shares of stock should be issued
E)  Establishing the target debt-equity ratioF) B) and D)
G) None of the above

Question 7

Which of the following are effective means of aligning management goals with shareholder interests?
I.Employee stock options
II.Threat of a takeover
III.Management bonuses tied to performance goals
IV.Threat of a proxy fight

Accepted Answer

A)  I and III only
B)  II and IV only
C)  I, II, and III only
D)  I, III, and IV only
E)  I, II, III, and IVF) A) and B)
G) A) and C)

Question 8

Give an example of a potential agency problem for a corporation and identify means by which the firm can help reduce or eliminate that problem.

Accepted Answer

Student answers will vary but most shoul...

Question 9

Which one of the following forms of business organization offers liability protection to some of its owners but not to all of its owners?

Accepted Answer

A)  Sole proprietorship
B)  General partnership
C)  Limited partnership
D)  Limited liability company
E)  CorporationF) B) and E)
G) A) and D)

Question 10

Which one of the following statements about a limited partnership is correct?

Accepted Answer

A)  All partners have their losses limited to their capital investment in the partnership.
B)  All partners are treated equally.
C)  There must be at least one general partner.
D)  Equity financing is easy to obtain and unlimited.
E)  Any partner can transfer his or her ownership interest without ending the partnership.F) C) and D)
G) All of the above

Question 11

Marti had an unexpected surprise when she ate her Lotsa Good cereal this morning.She found a piece of metal mixed in her cereal.The potential claim that Marti has against this firm is that of a(n) :

Accepted Answer

A)  general creditor.
B)  debtholder.
C)  shareholder.
D)  stakeholder.
E)  agent.F) A) and D)
G) A) and E)

Question 12

The Sarbanes-Oxley Act of 2002 has:

Accepted Answer

A)  reduced the annual compliance costs of all publicly traded firms in the U.S.
B)  decreased senior management's involvement in the corporate annual report.
C)  greatly increased the number of U.S. firms that are going public for the first time.
D)  decreased the number of U.S. firms going public on foreign exchanges.
E)  made officers of publicly traded firms personally responsible for the firm's financial statements.F) All of the above
G) B) and D)

Question 13

Lester's BBQ has $121,000 in current assets and $109,000 in current liabilities.These values as referred to as the firm's:

Accepted Answer

A)  capital structure.
B)  cash equivalents.
C)  working capital.
D)  net assets.
E)  fixed accounts.F) All of the above
G) C) and D)

Question 14

Todd and Cathy created a firm that is a separate legal entity and will share ownership of that firm on a 50-50 basis.Which type of entity did they create if they have no personal liability for the firm's debts?

Accepted Answer

A)  Limited partnership
B)  Corporation
C)  Sole proprietorship
D)  General partnership
E)  Public companyF) B) and E)
G) A) and E)

Question 15

A sole proprietorship:

Accepted Answer

A)  provides limited liability for its owner.
B)  involves significant legal costs during the formation process.
C)  has an unlimited life.
D)  has its profits taxed as personal income.
E)  can generally raise significant capital from nonowner sources.F) B) and E)
G) A) and E)

Question 16

An auction market:

Accepted Answer

A)  is an electronic means of exchanging securities.
B)  has a physical trading floor.
C)  handles primary market transactions exclusively.
D)  is also referred to as an OTC market.
E)  is dealer based.F) C) and D)
G) A) and B)

Question 17

Stadford,Inc.is financed with 40 percent debt and 60 percent equity.This mixture of debt and equity is referred to as the firm's:

Accepted Answer

A)  capital structure.
B)  capital budget.
C)  asset allocation.
D)  working capital.
E)  risk structure.F) None of the above
G) A) and B)

Question 18

Jamie is employed as a commercial loan officer for a regional bank centered in the midwestern section of the U.S.Her job falls into which one of the following areas of finance?

Accepted Answer

A)  International finance
B)  Financial institutions
C)  Corporate finance
D)  Capital management
E)  InvestmentsF) C) and E)
G) A) and B)

Question 19

Will and Bill both enjoy sunshine,water,and surfboards.Thus,the two friends decided to create a business together renting surfboards,paddle boats,and inflatable devices in California.Will and Bill will equally share in the decision making and in the profits or losses.Which type of business did they create if they both have full personal liability for the firm's debts?

Accepted Answer

A)  Sole proprietorship
B)  Limited partnership
C)  Corporation
D)  Joint stock company
E)  General partnershipF) D) and E)
G) A) and C)

Question 20

The federal government has a tax claim on the cash flows of The Window Store.This claim is defined as a claim by one of the firm's:

Accepted Answer

A)  residual owners.
B)  shareholders.
C)  financiers.
D)  provisional partners.
E)  stakeholders.F) A) and C)
G) B) and C)

Exam 1: Introduction to Financial Management

Jamie is employed as a commercial loan officer for a regional bank centered in the midwestern section of the U.S.Her job falls into which one of the following areas of finance?

Correct Answer
verified

The federal government has a tax claim on the cash flows of The Window Store.This claim is defined as a claim by one of the firm's:

Correct Answer
verified

The Sarbanes-Oxley Act:

Correct Answer
verified

Which one of the following statements about a limited partnership is correct?

Correct Answer
verified

Stadford,Inc.is financed with 40 percent debt and 60 percent equity.This mixture of debt and equity is referred to as the firm's:

Correct Answer
verified

Correct Answer
verified

An auction market:

Correct Answer
verified

Which one of the following applies to a general partnership?

Correct Answer
verified

Working capital management includes which one of the following?

Correct Answer
verified

Which of the following are effective means of aligning management goals with shareholder interests? I.Employee stock options II.Threat of a takeover III.Management bonuses tied to performance goals IV.Threat of a proxy fight

Correct Answer
verified

Todd and Cathy created a firm that is a separate legal entity and will share ownership of that firm on a 50-50 basis.Which type of entity did they create if they have no personal liability for the firm's debts?

Correct Answer
verified

The "say on pay" portion of the Dodd-Frank Wall Street Reform and Consumer Protection Act requires corporations to do which one of the following?

Correct Answer
verified

Which one of the following is an advantage of being a limited partner?

Correct Answer
verified

The Sarbanes-Oxley Act of 2002 has:

Correct Answer
verified

Give an example of a potential agency problem for a corporation and identify means by which the firm can help reduce or eliminate that problem.

Correct Answer
verified
Student answers will vary but most shoul...
View Answer

Which one of the following forms of business organization offers liability protection to some of its owners but not to all of its owners?

Correct Answer
verified

Marti had an unexpected surprise when she ate her Lotsa Good cereal this morning.She found a piece of metal mixed in her cereal.The potential claim that Marti has against this firm is that of a(n) :

Correct Answer
verified

Lester's BBQ has $121,000 in current assets and $109,000 in current liabilities.These values as referred to as the firm's:

Correct Answer
verified

Which of the following are advantages of the corporate form of organization? I.Ability to raise large sums of equity capital II.Ease of ownership transfer III.Profits taxed at the corporate level IV.Limited liability for all owners

Correct Answer
verified

A sole proprietorship:

Correct Answer
verified

Exam 1: Introduction to Financial Management

Jamie is employed as a commercial loan officer for a regional bank centered in the midwestern section of the U.S.Her job falls into which one of the following areas of finance?

Correct AnswerverifiedShow Answer

The federal government has a tax claim on the cash flows of The Window Store.This claim is defined as a claim by one of the firm's:

Correct AnswerverifiedShow Answer

The Sarbanes-Oxley Act:

Correct AnswerverifiedShow Answer

Which one of the following statements about a limited partnership is correct?

Correct AnswerverifiedShow Answer

Stadford,Inc.is financed with 40 percent debt and 60 percent equity.This mixture of debt and equity is referred to as the firm's:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

An auction market:

Correct AnswerverifiedShow Answer

Which one of the following applies to a general partnership?

Correct AnswerverifiedShow Answer

Working capital management includes which one of the following?

Correct AnswerverifiedShow Answer

Which of the following are effective means of aligning management goals with shareholder interests? I.Employee stock options II.Threat of a takeover III.Management bonuses tied to performance goals IV.Threat of a proxy fight

Correct AnswerverifiedShow Answer

Todd and Cathy created a firm that is a separate legal entity and will share ownership of that firm on a 50-50 basis.Which type of entity did they create if they have no personal liability for the firm's debts?

Correct AnswerverifiedShow Answer

The "say on pay" portion of the Dodd-Frank Wall Street Reform and Consumer Protection Act requires corporations to do which one of the following?

Correct AnswerverifiedShow Answer

Which one of the following is an advantage of being a limited partner?

Correct AnswerverifiedShow Answer

The Sarbanes-Oxley Act of 2002 has:

Correct AnswerverifiedShow Answer

Give an example of a potential agency problem for a corporation and identify means by which the firm can help reduce or eliminate that problem.

Correct AnswerverifiedStudent answers will vary but most shoul...View AnswerShow Answer

Which one of the following forms of business organization offers liability protection to some of its owners but not to all of its owners?

Correct AnswerverifiedShow Answer

Marti had an unexpected surprise when she ate her Lotsa Good cereal this morning.She found a piece of metal mixed in her cereal.The potential claim that Marti has against this firm is that of a(n) :

Correct AnswerverifiedShow Answer

Lester's BBQ has $121,000 in current assets and $109,000 in current liabilities.These values as referred to as the firm's:

Correct AnswerverifiedShow Answer

Which of the following are advantages of the corporate form of organization? I.Ability to raise large sums of equity capital II.Ease of ownership transfer III.Profits taxed at the corporate level IV.Limited liability for all owners

Correct AnswerverifiedShow Answer

A sole proprietorship:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Student answers will vary but most shoul...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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