Question 1

Which of these is the system of incentives and monitors that tries to overcome the agency problem?

Accepted Answer

A)  Security Exchange Commission 
B)  Checks and Balances 
C)  Board of Directors 
D)  Corporate Governance 
A)  Security Exchange Commission 
B)  Checks and Balances 
C)  Board of Directors 
D)  Corporate Governance

Question 2

For corporations, maximizing the value of owner's equity can also be stated as

Accepted Answer

A)  maximizing retained earnings. 
B)  maximizing earnings per share. 
C)  maximizing net income. 
D)  maximizing the stock price. 
A)  maximizing retained earnings. 
B)  maximizing earnings per share. 
C)  maximizing net income. 
D)  maximizing the stock price.

Question 3

The treasurer is typically responsible for:

Accepted Answer

A)  Managing cash and credit. 
B)  Issuing and repurchasing financial securities such as stocks and bonds. 
C)  Hedging against charges in foreign exchange and interest rates. 
D)  All of the above. 
A)  Managing cash and credit. 
B)  Issuing and repurchasing financial securities such as stocks and bonds. 
C)  Hedging against charges in foreign exchange and interest rates. 
D)  All of the above.

Question 4

The most common type of business in the United States is the

Accepted Answer

A)  corporation. 
B)  partnership. 
C)  sole proprietorship. 
D)  hybrid organization such as a limited liability company. 
A)  corporation. 
B)  partnership. 
C)  sole proprietorship. 
D)  hybrid organization such as a limited liability company.

Question 5

Which of the following is an example of aligning managers' personal interests with those of the owners?

Accepted Answer

A)  allow the managers to have as many perks as they request 
B)  pay the managers high salaries 
C)  offer the managers an equity stake in the firm 
D)  trust the managers' actions as they will always act in the owners' best interest 
A)  allow the managers to have as many perks as they request 
B)  pay the managers high salaries 
C)  offer the managers an equity stake in the firm 
D)  trust the managers' actions as they will always act in the owners' best interest

Question 6

Which of the following statements is incorrect?

Accepted Answer

A)  Partnerships have unlimited liability. 
B)  Most sole proprietors raise money by borrowing from banks. 
C)  An advantage of sole proprietorships is that the owner has complete control. 
D)  S corporations are considered a hybrid organization. 
A)  Partnerships have unlimited liability. 
B)  Most sole proprietors raise money by borrowing from banks. 
C)  An advantage of sole proprietorships is that the owner has complete control. 
D)  S corporations are considered a hybrid organization.

Question 7

The opportunity to buy stock at a fixed price over a specific period of time is referred to as

Accepted Answer

A)  stock opportunities. 
B)  stock options. 
C)  real assets. 
D)  restricted stock. 
A)  stock opportunities. 
B)  stock options. 
C)  real assets. 
D)  restricted stock.

Question 8

Which of the following can create ethical dilemmas between corporate managers and stockholders?

Accepted Answer

A)  agency relationship 
B)  auditors 
C)  boards of directors 
D)  venture capitalist 
A)  agency relationship 
B)  auditors 
C)  boards of directors 
D)  venture capitalist

Question 9

From a taxation perspective, the form of business organization with the highest business level taxes is the

Accepted Answer

A)  sole proprietorship. 
B)  corporation. 
C)  partnership. 
D)  S corporation. 
A)  sole proprietorship. 
B)  corporation. 
C)  partnership. 
D)  S corporation.

Question 10

This subarea of finance is important for adapting to the global economy.

Accepted Answer

A)  investments 
B)  financial management 
C)  international finance 
D)  financial institutions and markets 
A)  investments 
B)  financial management 
C)  international finance 
D)  financial institutions and markets

Question 11

These individuals examine the firm's accounting systems and comment on whether financial statements fairly represent the firm's financial position.

Accepted Answer

A)  accounting departments 
B)  chief financial officers 
C)  board of directors 
D)  auditors 
A)  accounting departments 
B)  chief financial officers 
C)  board of directors 
D)  auditors

Question 12

Which of these does NOT act as a monitor of how the firm is being run outside the firm?

Accepted Answer

A)  auditors 
B)  analysts 
C)  credit rating agencies 
D)  members of the board of directors 
A)  auditors 
B)  analysts 
C)  credit rating agencies 
D)  members of the board of directors

Question 13

Maximizing owners' equity value means carefully considering all of the following EXCEPT

Accepted Answer

A)  how to best bring additional funds into the firm. 
B)  which projects to invest in. 
C)  how best to increase the firm's risk. 
D)  how best to return the profits from those projects to the owners over time. 
A)  how to best bring additional funds into the firm. 
B)  which projects to invest in. 
C)  how best to increase the firm's risk. 
D)  how best to return the profits from those projects to the owners over time.

Question 14

From the perspective of control, the best form of business organization is the

Accepted Answer

A)  sole proprietorship. 
B)  corporation. 
C)  partnership. 
D)  S corporation. 
A)  sole proprietorship. 
B)  corporation. 
C)  partnership. 
D)  S corporation.

Question 15

Which of the following will help you make better personal financial decisions?

Accepted Answer

A)  knowing finance theory 
B)  applying financial tools 
C)  auditors 
D)  knowing finance theory and applying financial tools. 
A)  knowing finance theory 
B)  applying financial tools 
C)  auditors 
D)  knowing finance theory and applying financial tools.

Question 16

This should be the primary objective of a firm as it may actually be the most beneficial for society in the long run.

Accepted Answer

A)  minimizing layoffs 
B)  maximizing market share 
C)  minimizing costs 
D)  maximizing shareholder value 
A)  minimizing layoffs 
B)  maximizing market share 
C)  minimizing costs 
D)  maximizing shareholder value

Question 17

Which of the following is NOT considered a hybrid organization?

Accepted Answer

A)  S corporation 
B)  limited liability partnership 
C)  limited liability company 
D)  limited partnership 
E)  all of these choices are correct. 
A)  S corporation 
B)  limited liability partnership 
C)  limited liability company 
D)  limited partnership 
E)  all of these choices are correct.

Question 18

As individual legal entities, corporations assume liability for their own debts, so the shareholders hold

Accepted Answer

A)  only limited liability. 
B)  unlimited liability. 
C)  shared liability. 
D)  joint liability. 
A)  only limited liability. 
B)  unlimited liability. 
C)  shared liability. 
D)  joint liability.

Question 19

The agency relationship in corporate finance occurs

Accepted Answer

A)  when the shareholders hire a manager to run their company. 
B)  when the corporation hires an advertising agency to market their new product or service. 
C)  when the board of directors are elected to staggered terms. 
D)  when the board of directors oversee the CEO. 
A)  when the shareholders hire a manager to run their company. 
B)  when the corporation hires an advertising agency to market their new product or service. 
C)  when the board of directors are elected to staggered terms. 
D)  when the board of directors oversee the CEO.

Question 20

From the perspective of access to capital, the best form of business organization is the

Accepted Answer

A)  sole proprietorship. 
B)  corporation. 
C)  partnership. 
D)  S corporation. 
A)  sole proprietorship. 
B)  corporation. 
C)  partnership. 
D)  S corporation.

Which of these is the system of incentives and monitors that tries to overcome the agency problem?

For corporations, maximizing the value of owner's equity can also be stated as

The treasurer is typically responsible for:

The most common type of business in the United States is the

Which of the following is an example of aligning managers' personal interests with those of the owners?

Which of the following statements is incorrect?

The opportunity to buy stock at a fixed price over a specific period of time is referred to as

Which of the following can create ethical dilemmas between corporate managers and stockholders?

From a taxation perspective, the form of business organization with the highest business level taxes is the

This subarea of finance is important for adapting to the global economy.

These individuals examine the firm's accounting systems and comment on whether financial statements fairly represent the firm's financial position.

Which of these does NOT act as a monitor of how the firm is being run outside the firm?

Maximizing owners' equity value means carefully considering all of the following EXCEPT

From the perspective of control, the best form of business organization is the

Which of the following will help you make better personal financial decisions?

This should be the primary objective of a firm as it may actually be the most beneficial for society in the long run.

Which of the following is NOT considered a hybrid organization?

As individual legal entities, corporations assume liability for their own debts, so the shareholders hold

The agency relationship in corporate finance occurs

From the perspective of access to capital, the best form of business organization is the

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money 1: Analyzing Single Cash Flows

Time Value of Money 2: Analyzing Annuity Cash Flows

Understanding Financial Markets and Institutions

Valuing Bonds

Valuing Stocks

Characterizing Risk and Return

Estimating Risk and Return

Calculating the Cost of Capital

Estimating Cash Flows on Capital Budgeting Projects

Weighing Net Present Value and Other Capital Budgeting Criteria

Working Capital Management and Policies

Financial Planning and Forecasting

Assessing Long-Term Debt, Equity, and Capital Structure

Sharing Firm Wealth: Dividends, Share Repurchases, and Other Payouts

Issuing Capital and the Investment Banking Process

International Corporate Finance

Mergers and Acquisitions and Financial Distress

Filters

Exam 1: Introduction to Financial Management

Which of these is the system of incentives and monitors that tries to overcome the agency problem?

For corporations, maximizing the value of owner's equity can also be stated as

The treasurer is typically responsible for:

The most common type of business in the United States is the

Which of the following is an example of aligning managers' personal interests with those of the owners?

Which of the following statements is incorrect?

The opportunity to buy stock at a fixed price over a specific period of time is referred to as

Which of the following can create ethical dilemmas between corporate managers and stockholders?

From a taxation perspective, the form of business organization with the highest business level taxes is the

This subarea of finance is important for adapting to the global economy.

These individuals examine the firm's accounting systems and comment on whether financial statements fairly represent the firm's financial position.

Which of these does NOT act as a monitor of how the firm is being run outside the firm?

Maximizing owners' equity value means carefully considering all of the following EXCEPT

From the perspective of control, the best form of business organization is the

Which of the following will help you make better personal financial decisions?

This should be the primary objective of a firm as it may actually be the most beneficial for society in the long run.

Which of the following is NOT considered a hybrid organization?

As individual legal entities, corporations assume liability for their own debts, so the shareholders hold

The agency relationship in corporate finance occurs

From the perspective of access to capital, the best form of business organization is the

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money 1: Analyzing Single Cash Flows

Time Value of Money 2: Analyzing Annuity Cash Flows

Understanding Financial Markets and Institutions

Valuing Bonds

Valuing Stocks

Characterizing Risk and Return

Estimating Risk and Return

Calculating the Cost of Capital

Estimating Cash Flows on Capital Budgeting Projects

Weighing Net Present Value and Other Capital Budgeting Criteria

Working Capital Management and Policies

Financial Planning and Forecasting

Assessing Long-Term Debt, Equity, and Capital Structure

Sharing Firm Wealth: Dividends, Share Repurchases, and Other Payouts

Issuing Capital and the Investment Banking Process

International Corporate Finance

Mergers and Acquisitions and Financial Distress

Filters