Question 1

Which of the following statements is CORRECT?

Accepted Answer

A)  If General Electric were to issue new stock this year it would be considered a secondary market transaction since the company already
Has stock outstanding. 
B)  Capital market transactions only include preferred stock and common
Stock transactions. 
C)  The distinguishing feature between spot markets versus futures markets transactions is the maturity of the investments. That is, spot market transactions involve securities that have maturities of less than one year, whereas futures markets transactions involve
Securities with maturities greater than one year. 
D)  Both Nasdaq "dealers" and NYSE "specialists" hold inventories of
Stocks. 
E)  An electronic communications network (ECN) is a physical location
Exchange. 
A)  If General Electric were to issue new stock this year it would be considered a secondary market transaction since the company already
Has stock outstanding. 
B)  Capital market transactions only include preferred stock and common
Stock transactions. 
C)  The distinguishing feature between spot markets versus futures markets transactions is the maturity of the investments. That is, spot market transactions involve securities that have maturities of less than one year, whereas futures markets transactions involve
Securities with maturities greater than one year. 
D)  Both Nasdaq "dealers" and NYSE "specialists" hold inventories of
Stocks. 
E)  An electronic communications network (ECN) is a physical location
Exchange.

Question 2

Which of the following statements is CORRECT?

Accepted Answer

A)  If expected inflation increases, interest rates are likely to increase. 
B)  If individuals in general increase the percentage of their income
That they save, interest rates are likely to increase. 
C)  If companies have fewer good investment opportunities, interest
Rates are likely to increase. 
D)  Interest rates on all debt securities tend to rise during recessions because recessions increase the possibility of
Bankruptcy, hence the riskiness of all debt securities. 
E)  Interest rates on long-term bonds are more volatile than rates on
Short-term debt securities like T-bills. 
A)  If expected inflation increases, interest rates are likely to increase. 
B)  If individuals in general increase the percentage of their income
That they save, interest rates are likely to increase. 
C)  If companies have fewer good investment opportunities, interest
Rates are likely to increase. 
D)  Interest rates on all debt securities tend to rise during recessions because recessions increase the possibility of
Bankruptcy, hence the riskiness of all debt securities. 
E)  Interest rates on long-term bonds are more volatile than rates on
Short-term debt securities like T-bills.

Question 3

One drawback of switching from a partnership to the corporate form of organization is the following:

Accepted Answer

A)  It subjects the firm to additional regulations. 
B)  It cannot affect the amount of the firm's operating income that
Goes to taxes. 
C)  It makes it more difficult for the firm to raise additional
Capital. 
D)  It makes the firm's investors subject to greater potential personal
Liabilities. 
E)  It makes it more difficult for the firm's investors to transfer their ownership interests. 
A)  It subjects the firm to additional regulations. 
B)  It cannot affect the amount of the firm's operating income that
Goes to taxes. 
C)  It makes it more difficult for the firm to raise additional
Capital. 
D)  It makes the firm's investors subject to greater potential personal
Liabilities. 
E)  It makes it more difficult for the firm's investors to transfer their ownership interests.

Question 4

You recently sold 100 shares of your new company, XYZ Corporation, to your brother at a family reunion. At the reunion your brother gave you a check for the stock and you gave your brother the stock certificates. Which of the following statements best describes this transaction?

Accepted Answer

A)  This is an example of an exchange of physical assets. 
B)  This is an example of a primary market transaction. 
C)  This is an example of a direct transfer of capital. 
D)  This is an example of a money market transaction. 
E)  This is an example of a derivatives market transaction. 
A)  This is an example of an exchange of physical assets. 
B)  This is an example of a primary market transaction. 
C)  This is an example of a direct transfer of capital. 
D)  This is an example of a money market transaction. 
E)  This is an example of a derivatives market transaction.

Question 5

Which of the following statements is CORRECT?

Accepted Answer

A)  Corporations are at a disadvantage relative to partnerships because they have to file more reports to state and federal agencies, including the Securities and Exchange Administration, even if they
Are not publicly owned. 
B)  In a regular partnership, liability for the firm's debts is limited
To the amount a particular partner has invested in the business. 
C)  A fast-growth company would be more likely to set up as a partnership for its business organization than would a slow-growth
Company. 
D)  Partnerships have difficulty attracting capital in part because of their unlimited liability, the lack of impermanence of the
Organization, and difficulty in transferring ownership. 
E)  A major disadvantage of a partnership relative to a corporation as a form of business organization is the high cost and practical
Difficulty of its formation. 
A)  Corporations are at a disadvantage relative to partnerships because they have to file more reports to state and federal agencies, including the Securities and Exchange Administration, even if they
Are not publicly owned. 
B)  In a regular partnership, liability for the firm's debts is limited
To the amount a particular partner has invested in the business. 
C)  A fast-growth company would be more likely to set up as a partnership for its business organization than would a slow-growth
Company. 
D)  Partnerships have difficulty attracting capital in part because of their unlimited liability, the lack of impermanence of the
Organization, and difficulty in transferring ownership. 
E)  A major disadvantage of a partnership relative to a corporation as a form of business organization is the high cost and practical
Difficulty of its formation.

Question 6

The primary operating goal of a publicly-owned firm interested in serving its stockholders should be to

Accepted Answer

A)  Maximize the stock price per share over the long run, which is the stock's intrinsic value. 
B)  Maximize the firm's expected EPS. 
C)  Minimize the chances of losses. 
D)  Maximize the firm's expected total income. 
E)  Maximize the stock price on a specific target date. 
A)  Maximize the stock price per share over the long run, which is the stock's intrinsic value. 
B)  Maximize the firm's expected EPS. 
C)  Minimize the chances of losses. 
D)  Maximize the firm's expected total income. 
E)  Maximize the stock price on a specific target date.

Which of the following statements is CORRECT?

Which of the following statements is CORRECT?

One drawback of switching from a partnership to the corporate form of organization is the following:

You recently sold 100 shares of your new company, XYZ Corporation, to your brother at a family reunion. At the reunion your brother gave you a check for the stock and you gave your brother the stock certificates. Which of the following statements best describes this transaction?

Which of the following statements is CORRECT?

The primary operating goal of a publicly-owned firm interested in serving its stockholders should be to

Financial Statements, Cash Flow, and Taxes

Analysis of Financial Statements

Time Value of Money

Bonds, Bond Valuation, and Interest Rates

Risk, Return, and the Capital Asset Pricing Model

Stocks, Stock Valuation, and Stock Market Equilibrium

Financial Options and Applications in Corporate Finance

The Cost of Capital

The Basics of Capital Budgeting: Evaluating Cash Flows

Cash Flow Estimation and Risk Analysis

Financial Planning and Forecasting Financial Statements

Corporate Valuation, Value-Based Management and Corporate Governance

Distributions to Shareholders: Dividends and Repurchases

Capital Structure Decisions

Working Capital Management

Multinational Financial Management

Lease Financing

Hybrid Financing: Preferred Stock, Warrants, and Convertibles

Initial Public Offerings, Investment Banking, and Financial Restructuring

Mergers, Lbos, Divestitures, and Holding Companies

Bankruptcy, Reorganization, and Liquidation

Derivatives and Risk Management

Portfolio Theory, Asset Pricing Models, and Behavioral Finance

Real Options

Analysis of Capital Structure Theory

Providing and Obtaining Credit

Advanced Issues in Cash Management and Inventory Control

Pension Plan Management

Financial Management in Not-For-Profit Businesses

Filters

Exam 1: An Overview of Financial Management and the Financial Environment

Which of the following statements is CORRECT?

Which of the following statements is CORRECT?

One drawback of switching from a partnership to the corporate form of organization is the following:

You recently sold 100 shares of your new company, XYZ Corporation, to your brother at a family reunion. At the reunion your brother gave you a check for the stock and you gave your brother the stock certificates. Which of the following statements best describes this transaction?

Which of the following statements is CORRECT?

The primary operating goal of a publicly-owned firm interested in serving its stockholders should be to

Financial Statements, Cash Flow, and Taxes

Analysis of Financial Statements

Time Value of Money

Bonds, Bond Valuation, and Interest Rates

Risk, Return, and the Capital Asset Pricing Model

Stocks, Stock Valuation, and Stock Market Equilibrium

Financial Options and Applications in Corporate Finance

The Cost of Capital

The Basics of Capital Budgeting: Evaluating Cash Flows

Cash Flow Estimation and Risk Analysis

Financial Planning and Forecasting Financial Statements

Corporate Valuation, Value-Based Management and Corporate Governance

Distributions to Shareholders: Dividends and Repurchases

Capital Structure Decisions

Working Capital Management

Multinational Financial Management

Lease Financing

Hybrid Financing: Preferred Stock, Warrants, and Convertibles

Initial Public Offerings, Investment Banking, and Financial Restructuring

Mergers, Lbos, Divestitures, and Holding Companies

Bankruptcy, Reorganization, and Liquidation

Derivatives and Risk Management

Portfolio Theory, Asset Pricing Models, and Behavioral Finance

Real Options

Analysis of Capital Structure Theory

Providing and Obtaining Credit

Advanced Issues in Cash Management and Inventory Control

Pension Plan Management

Financial Management in Not-For-Profit Businesses

Filters