Question 1

In the United States, the most common form of business is the _____, and the form of business that generates most of the sales and profits is the _____.

Accepted Answer

A)  corporation; corporation 
B)  corporation; proprietorship 
C)  proprietorship; partnership 
D)  proprietorship; corporation 
E)  corporation; partnership 
A)  corporation; corporation 
B)  corporation; proprietorship 
C)  proprietorship; partnership 
D)  proprietorship; corporation 
E)  corporation; partnership D

Question 2

Which of the following mathematical expressions computes earnings per share?

Accepted Answer

A)  Earnings per share = Net Income × Number of outstanding shares of common stock 
B)  Earnings per share = (Net Income + Dividend Paid) ÷ Number of outstanding shares of common stock 
C)  Earnings per share = Net Income ÷ Number of outstanding shares of common stock 
D)  Earnings per share = (Net Income - Dividend Paid) ÷ Number of outstanding shares of common stock 
E)  Earnings per share = (Net Income - Dividend Paid) × Number of outstanding shares of common stock 
A)  Earnings per share = Net Income × Number of outstanding shares of common stock 
B)  Earnings per share = (Net Income + Dividend Paid) ÷ Number of outstanding shares of common stock 
C)  Earnings per share = Net Income ÷ Number of outstanding shares of common stock 
D)  Earnings per share = (Net Income - Dividend Paid) ÷ Number of outstanding shares of common stock 
E)  Earnings per share = (Net Income - Dividend Paid) × Number of outstanding shares of common stock C

Question 3

The 11 "titles" in the Sarbanes-Oxley Act of 2002 establish standards for accountability and responsibility of financial reporting information for major corporations. Which of the following activities does the act provide rules that a corporation must abide by?

Accepted Answer

A)  The corporation must have a committee that consists of an internal director nominated from the board to oversee the firm's audits. 
B)  The corporation's internal auditor will render an unbiased (independent) opinion concerning the firm's financial statement. 
C)  The corporation must maximize social welfare through funding of environmentally friendly activities. 
D)  The corporation must provide additional information about the procedures used to construct and report financial statements. 
E)  The firm's CEO and CFO must certify audit reports submitted to the Securities Exchange Commission. 
A)  The corporation must have a committee that consists of an internal director nominated from the board to oversee the firm's audits. 
B)  The corporation's internal auditor will render an unbiased (independent) opinion concerning the firm's financial statement. 
C)  The corporation must maximize social welfare through funding of environmentally friendly activities. 
D)  The corporation must provide additional information about the procedures used to construct and report financial statements. 
E)  The firm's CEO and CFO must certify audit reports submitted to the Securities Exchange Commission. D

Question 4

Identify a true statement about an S corporation.

Accepted Answer

A)  An S Corporation is required to have more than 100 stockholders. 
B)  An S Corporation is required to have more than one type of stock outstanding. 
C)  The income of an S Corporation passes through the company to the owners. 
D)  The income of an S Corporation is taxed twice, at the corporate level and the owner level. 
E)  The income of an S Corporation is taxed as capital gains to the owners. 
A)  An S Corporation is required to have more than 100 stockholders. 
B)  An S Corporation is required to have more than one type of stock outstanding. 
C)  The income of an S Corporation passes through the company to the owners. 
D)  The income of an S Corporation is taxed twice, at the corporate level and the owner level. 
E)  The income of an S Corporation is taxed as capital gains to the owners.

Question 5

The treasurer of a company is a key subordinate of the _____.

Accepted Answer

A)  controller 
B)  financial vice president 
C)  chief executive officer 
D)  credit manager 
E)  director of capital budgeting 
A)  controller 
B)  financial vice president 
C)  chief executive officer 
D)  credit manager 
E)  director of capital budgeting

Question 6

The term multinational corporation is used to describe a firm that operates in two or more countries.

Accepted Answer

A) True 
 B)False

Question 7

Assuming everything else equal, one of the concepts to consider to make sound financial decisions is that _____.

Accepted Answer

A)  the riskier assets always have lower market value 
B)  the riskier assets are more valuable than (preferred to) less risky assets 
C)  the sooner cash is received, the more valuable it is 
D)  investors always prefer short-term, low value, and high-risk assets 
E)  investors always achieve higher returns from less risky assets 
A)  the riskier assets always have lower market value 
B)  the riskier assets are more valuable than (preferred to) less risky assets 
C)  the sooner cash is received, the more valuable it is 
D)  investors always prefer short-term, low value, and high-risk assets 
E)  investors always achieve higher returns from less risky assets

Question 8

The accounting and tax departments are the responsibility of the _____.

Accepted Answer

A)  treasurer 
B)  inventory manager 
C)  director of capital budgeting 
D)  vice president of finance 
E)  controller 
A)  treasurer 
B)  inventory manager 
C)  director of capital budgeting 
D)  vice president of finance 
E)  controller

Question 9

Identify the internal factor that influences the stock prices of a firm.

Accepted Answer

A)  Legal constraints 
B)  Capital structure 
C)  Tax laws 
D)  General level of economic activity 
E)  Conditions in the stock market 
A)  Legal constraints 
B)  Capital structure 
C)  Tax laws 
D)  General level of economic activity 
E)  Conditions in the stock market

Question 10

Identify the external factor that affects the value of a firm's stock.

Accepted Answer

A)  Capital structure decisions 
B)  General level of economic activity 
C)  Capital budgeting decisions 
D)  Dividend policy decisions 
E)  Cash flow of the firm 
A)  Capital structure decisions 
B)  General level of economic activity 
C)  Capital budgeting decisions 
D)  Dividend policy decisions 
E)  Cash flow of the firm

Question 11

A financial manager's task is to make decisions concerning the acquisition and use of funds for the greatest benefit of the firm.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following forms of business offers limited personal liability but the company's income can be taxed like a partnership?

Accepted Answer

A)  Limited liability partnership 
B)  Limited liability company 
C)  Corporation 
D)  Sole proprietorship 
E)  Partnership 
A)  Limited liability partnership 
B)  Limited liability company 
C)  Corporation 
D)  Sole proprietorship 
E)  Partnership

Question 13

The riskiness inherent in a firm's earnings per share (EPS) depends on both the types of projects the firm takes on and the manner in which the projects are financed.

Accepted Answer

A) True 
 B)False

Question 14

A proprietorship is an unincorporated business owned by one individual and the owner benefits from the limited liability for business, which limits his losses to what he has invested in the company.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements is true of earnings per share?

Accepted Answer

A)  A company is liable to pay tax on the earnings per share of stockholders. 
B)  Earnings per share can be maximized by changing from corporation to sole proprietorship form of organization. 
C)  A company can maximize its value by maximizing earnings per share. 
D)  Earnings per share is used in measuring the firm's potential for generating future cash flows. 
E)  A high earnings per share in the current period results in lower future risk position of the business. 
A)  A company is liable to pay tax on the earnings per share of stockholders. 
B)  Earnings per share can be maximized by changing from corporation to sole proprietorship form of organization. 
C)  A company can maximize its value by maximizing earnings per share. 
D)  Earnings per share is used in measuring the firm's potential for generating future cash flows. 
E)  A high earnings per share in the current period results in lower future risk position of the business.

Question 16

Which of the following is true of financial services provided by persons working in banks, insurance companies, and brokerage firms?

Accepted Answer

A)  Persons working in banks, insurance companies, and brokerage firms help investors achieve the highest earnings per share. 
B)  Persons working in banks, insurance companies, and brokerage firms help individuals and companies determine how to invest money to achieve their financial goals. 
C)  Persons working in banks, insurance companies, and brokerage firms help corporations fulfil the regulations required by the Sarbanes-Oxley Act. 
D)  Persons working in banks, insurance companies, and brokerage firms help public corporations follow environment-friendly practices. 
E)  Persons working in banks, insurance companies, and brokerage firms help corporations make decisions concerning their cash flows, including both inflows and outflows. 
A)  Persons working in banks, insurance companies, and brokerage firms help investors achieve the highest earnings per share. 
B)  Persons working in banks, insurance companies, and brokerage firms help individuals and companies determine how to invest money to achieve their financial goals. 
C)  Persons working in banks, insurance companies, and brokerage firms help corporations fulfil the regulations required by the Sarbanes-Oxley Act. 
D)  Persons working in banks, insurance companies, and brokerage firms help public corporations follow environment-friendly practices. 
E)  Persons working in banks, insurance companies, and brokerage firms help corporations make decisions concerning their cash flows, including both inflows and outflows.

Question 17

In a competitive marketplace "good ethics" is a wonderful idea but an impractical standard. There are simply too few benefits to be gained from maintaining high business ethics.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following should be the primary goal pursued by the financial manager of a firm?

Accepted Answer

A)  Maximizing net income (profits) 
B)  Maximizing the firm's net worth, or book value 
C)  Maximizing dividends paid to common stockholders 
D)  Minimizing variable operating expenses 
E)  Maximizing the market value of the firm's stock 
A)  Maximizing net income (profits) 
B)  Maximizing the firm's net worth, or book value 
C)  Maximizing dividends paid to common stockholders 
D)  Minimizing variable operating expenses 
E)  Maximizing the market value of the firm's stock

Question 19

Cultural differences do not impact the multinational corporations as they expand into different geographic regions.

Accepted Answer

A) True 
 B)False

Question 20

The corporate charter is a document filed with the secretary of the state in which the firm is incorporated that provides information about the company, including its name, address, directors, and amount of capital stock.

Accepted Answer

A) True 
 B)False

In the United States, the most common form of business is the _, and the form of business that generates most of the sales and profits is the _.

Which of the following mathematical expressions computes earnings per share?

The 11 "titles" in the Sarbanes-Oxley Act of 2002 establish standards for accountability and responsibility of financial reporting information for major corporations. Which of the following activities does the act provide rules that a corporation must abide by?

Identify a true statement about an S corporation.

The treasurer of a company is a key subordinate of the _____.

The term multinational corporation is used to describe a firm that operates in two or more countries.

Assuming everything else equal, one of the concepts to consider to make sound financial decisions is that _____.

The accounting and tax departments are the responsibility of the _____.

Identify the internal factor that influences the stock prices of a firm.

Identify the external factor that affects the value of a firm's stock.

A financial manager's task is to make decisions concerning the acquisition and use of funds for the greatest benefit of the firm.

Which of the following forms of business offers limited personal liability but the company's income can be taxed like a partnership?

The riskiness inherent in a firm's earnings per share (EPS) depends on both the types of projects the firm takes on and the manner in which the projects are financed.

A proprietorship is an unincorporated business owned by one individual and the owner benefits from the limited liability for business, which limits his losses to what he has invested in the company.

Which of the following statements is true of earnings per share?

Which of the following is true of financial services provided by persons working in banks, insurance companies, and brokerage firms?

In a competitive marketplace "good ethics" is a wonderful idea but an impractical standard. There are simply too few benefits to be gained from maintaining high business ethics.

Which of the following should be the primary goal pursued by the financial manager of a firm?

Cultural differences do not impact the multinational corporations as they expand into different geographic regions.

The corporate charter is a document filed with the secretary of the state in which the firm is incorporated that provides information about the company, including its name, address, directors, and amount of capital stock.

Analysis of Financial Statements

The Financial Environment: Markets, Institutions, and Investment Banking

Time Value of Money

The Cost of Money Interest Rates

Bonds Debtcharacteristics and Valuation

Stocks Equity Characteristics and Valuation

Risk and Rates of Return

Capital Budgeting Techniques

Project Cash Flows and Risk

The Cost of Capital

Capital Structure

Distribution of Retained Earnings: Dividends and Stock Repurchases

Managing Short-Term Financing Liabilities

Managing Short-Term Assets

Financial Planning and Control

Filters

Exam 1: An Overview of Managerial Finance

In the United States, the most common form of business is the _____, and the form of business that generates most of the sales and profits is the _____.

Which of the following mathematical expressions computes earnings per share?

The 11 "titles" in the Sarbanes-Oxley Act of 2002 establish standards for accountability and responsibility of financial reporting information for major corporations. Which of the following activities does the act provide rules that a corporation must abide by?

Identify a true statement about an S corporation.

The treasurer of a company is a key subordinate of the _____.

The term multinational corporation is used to describe a firm that operates in two or more countries.

Assuming everything else equal, one of the concepts to consider to make sound financial decisions is that _____.

The accounting and tax departments are the responsibility of the _____.

Identify the internal factor that influences the stock prices of a firm.

Identify the external factor that affects the value of a firm's stock.

A financial manager's task is to make decisions concerning the acquisition and use of funds for the greatest benefit of the firm.

Which of the following forms of business offers limited personal liability but the company's income can be taxed like a partnership?

The riskiness inherent in a firm's earnings per share (EPS) depends on both the types of projects the firm takes on and the manner in which the projects are financed.

A proprietorship is an unincorporated business owned by one individual and the owner benefits from the limited liability for business, which limits his losses to what he has invested in the company.

Which of the following statements is true of earnings per share?

Which of the following is true of financial services provided by persons working in banks, insurance companies, and brokerage firms?

In a competitive marketplace "good ethics" is a wonderful idea but an impractical standard. There are simply too few benefits to be gained from maintaining high business ethics.

Which of the following should be the primary goal pursued by the financial manager of a firm?

Cultural differences do not impact the multinational corporations as they expand into different geographic regions.

The corporate charter is a document filed with the secretary of the state in which the firm is incorporated that provides information about the company, including its name, address, directors, and amount of capital stock.

Analysis of Financial Statements

The Financial Environment: Markets, Institutions, and Investment Banking

Time Value of Money

The Cost of Money Interest Rates

Bonds Debtcharacteristics and Valuation

Stocks Equity Characteristics and Valuation

Risk and Rates of Return

Capital Budgeting Techniques

Project Cash Flows and Risk

The Cost of Capital

Capital Structure

Distribution of Retained Earnings: Dividends and Stock Repurchases

Managing Short-Term Financing Liabilities

Managing Short-Term Assets

Financial Planning and Control

Filters

In the United States, the most common form of business is the _, and the form of business that generates most of the sales and profits is the _.