Question 1

Which one of the following is a working capital decision?

Accepted Answer

A) How should the firm raise additional capital to fund its expansion? 
B) What debt-equity ratio is best suited to the firm? 
C) What is the cost of debt financing? 
D) Should the firm borrow money for five or for ten years? 
E) How much cash should the firm keep in reserve? 
A) How should the firm raise additional capital to fund its expansion? 
B) What debt-equity ratio is best suited to the firm? 
C) What is the cost of debt financing? 
D) Should the firm borrow money for five or for ten years? 
E) How much cash should the firm keep in reserve? E

Question 2

If you accept a job as a domestic security analyst for a brokerage firm,you are most likely working in which one of the following financial areas?

Accepted Answer

A) International finance 
B) Private placements 
C) Corporate finance 
D) Capital management 
E) Investments 
A) International finance 
B) Private placements 
C) Corporate finance 
D) Capital management 
E) Investments E

Question 3

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 interest 
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 interest C

Question 4

A sole proprietorship:

Accepted Answer

A) provides limited financial 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 non-owner sources. 
A) provides limited financial 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 non-owner sources.

Question 5

Which one of the following is most apt to align management's priorities with shareholders' interests?

Accepted Answer

A) Holding corporate and shareholder meetings at high-end resort-type locations preferred by managers 
B) Compensating managers with shares of stock that must be held for a minimum of three years 
C) Paying a special management bonus on every fifth year of employment 
D) Increasing the number of paid holidays that long-term employees are entitled to receive 
E) Allowing employees to retire early with full retirement benefits 
A) Holding corporate and shareholder meetings at high-end resort-type locations preferred by managers 
B) Compensating managers with shares of stock that must be held for a minimum of three years 
C) Paying a special management bonus on every fifth year of employment 
D) Increasing the number of paid holidays that long-term employees are entitled to receive 
E) Allowing employees to retire early with full retirement benefits

Question 6

Which one of the following situations is most apt to create an agency conflict?

Accepted Answer

A) Compensating a manager based on his or her division's net income 
B) Giving all employees a bonus if a certain level of efficiency is maintained 
C) Hiring an independent consultant to study the operating efficiency of the firm 
D) Basing management bonuses on the length of employment 
E) Laying off employees during a slack period 
A) Compensating a manager based on his or her division's net income 
B) Giving all employees a bonus if a certain level of efficiency is maintained 
C) Hiring an independent consultant to study the operating efficiency of the firm 
D) Basing management bonuses on the length of employment 
E) Laying off employees during a slack period

Question 7

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

Question 8

Theo's BBQ has $48,000 in current assets and $39,000 in current liabilities.Decisions related to these accounts as referred to as:

Accepted Answer

A) capital structure decisions. 
B) capital budgeting decisions. 
C) working capital management. 
D) operating management. 
E) fixed account structure. 
A) capital structure decisions. 
B) capital budgeting decisions. 
C) working capital management. 
D) operating management. 
E) fixed account structure.

Question 9

When conducting a financial analysis of a firm,financial analysts:

Accepted Answer

A) cannot use accounting information as it is historical. 
B) rely solely on accounting information. 
C) frequently use accounting information. 
D) ignore accounting information but do use marketing information. 
E) assume the future will be a repeat of the past as reflected in the firm?s accounting reports. 
A) cannot use accounting information as it is historical. 
B) rely solely on accounting information. 
C) frequently use accounting information. 
D) ignore accounting information but do use marketing information. 
E) assume the future will be a repeat of the past as reflected in the firm?s accounting reports.

Question 10

Which one of the following statements is correct?

Accepted Answer

A) NASDAQ has more listed stocks than does the NYSE. 
B) The NYSE is a dealer market. 
C) NASDAQ is an auction market. 
D) NASDAQ has the most stringent listing requirements of any U.S.exchange. 
E) The trading floor for NASDAQ is located in Chicago. 
A) NASDAQ has more listed stocks than does the NYSE. 
B) The NYSE is a dealer market. 
C) NASDAQ is an auction market. 
D) NASDAQ has the most stringent listing requirements of any U.S.exchange. 
E) The trading floor for NASDAQ is located in Chicago.

Question 11

A private placement is most apt to involve:

Accepted Answer

A) a large number of private investors. 
B) only foreign investors. 
C) a life-insurance company. 
D) several private securities dealers. 
E) the U.S.Treasury department. 
A) a large number of private investors. 
B) only foreign investors. 
C) a life-insurance company. 
D) several private securities dealers. 
E) the U.S.Treasury department.

Question 12

Limited liability companies are primarily designed to:

Accepted Answer

A) allow a portion of their owners to enjoy limited liability while granting the other portion of their owners control over the entity. 
B) provide the benefits of the corporate structure only to foreign-based entities. 
C) spin off a wholly owned subsidiary. 
D) allow companies to reorganize themselves through the bankruptcy process. 
E) provide limited liability while avoiding double taxation. 
A) allow a portion of their owners to enjoy limited liability while granting the other portion of their owners control over the entity. 
B) provide the benefits of the corporate structure only to foreign-based entities. 
C) spin off a wholly owned subsidiary. 
D) allow companies to reorganize themselves through the bankruptcy process. 
E) provide limited liability while avoiding double taxation.

Question 13

Which one of the following occupations best fits into the corporate area of finance?

Accepted Answer

A) Mortgage broker 
B) Treasury bill analyst 
C) Chief financial officer 
D) Insurance risk manager 
E) Local bank manager 
A) Mortgage broker 
B) Treasury bill analyst 
C) Chief financial officer 
D) Insurance risk manager 
E) Local bank manager

Question 14

Jamie is employed as a currency trader in the Japanese yen market.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) Personal finance 
A) International finance 
B) Financial institutions 
C) Corporate finance 
D) Capital management 
E) Personal finance

Question 15

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 currently owned 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 ratio 
A) Deciding which new projects to accept 
B) Deciding whether to purchase a new machine or fix a currently owned 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 ratio

Question 16

In a general partnership,each partner is personally liable for:

Accepted Answer

A) only the partnership debts that he or she personally created. 
B) his or her proportionate share of all partnership debts regardless of which partner incurred that debt. 
C) the total debts of the partnership, even if he or she was unaware of those debts. 
D) the debts of the partnership up to the amount he or she invested in the firm. 
E) all personal and partnership debts incurred by any partner, even if he or she was unaware of those debts. 
A) only the partnership debts that he or she personally created. 
B) his or her proportionate share of all partnership debts regardless of which partner incurred that debt. 
C) the total debts of the partnership, even if he or she was unaware of those debts. 
D) the debts of the partnership up to the amount he or she invested in the firm. 
E) all personal and partnership debts incurred by any partner, even if he or she was unaware of those debts.

Question 17

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 business 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 partnership 
A) Sole proprietorship 
B) Limited partnership 
C) Corporation 
D) Joint stock company 
E) General partnership

Question 18

The Sarbanes-Oxley Act in 2002 was primarily prompted by which one of the following from the 1990s?

Accepted Answer

A) Increased stock market volatility 
B) Corporate accounting and financial fraud 
C) Increased executive compensation 
D) Increased foreign investment in U.S.stock markets 
E) Increased use of tax loopholes 
A) Increased stock market volatility 
B) Corporate accounting and financial fraud 
C) Increased executive compensation 
D) Increased foreign investment in U.S.stock markets 
E) Increased use of tax loopholes

Question 19

What is the primary goal of financial management for a sole proprietorship?

Accepted Answer

A) Maximize net income given the current resources of the firm 
B) Decrease long-term debt to reduce the risk to the owner 
C) Minimize the tax impact on the proprietor 
D) Maximize the market value of the equity 
E) Minimize the reliance on fixed costs 
A) Maximize net income given the current resources of the firm 
B) Decrease long-term debt to reduce the risk to the owner 
C) Minimize the tax impact on the proprietor 
D) Maximize the market value of the equity 
E) Minimize the reliance on fixed costs

Question 20

Levi had an unexpected surprise when he returned home this morning.He found that a chemical spill from a local manufacturer had spilled over onto his property.The potential claim that he has against this manufacturer is that of a(n):

Accepted Answer

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

Which one of the following is a working capital decision?

If you accept a job as a domestic security analyst for a brokerage firm,you are most likely working in which one of the following financial areas?

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

A sole proprietorship:

Which one of the following is most apt to align management's priorities with shareholders' interests?

Which one of the following situations is most apt to create an agency conflict?

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

Theo's BBQ has $48,000 in current assets and $39,000 in current liabilities.Decisions related to these accounts as referred to as:

When conducting a financial analysis of a firm,financial analysts:

Which one of the following statements is correct?

A private placement is most apt to involve:

Limited liability companies are primarily designed to:

Which one of the following occupations best fits into the corporate area of finance?

Jamie is employed as a currency trader in the Japanese yen market.Her job falls into which one of the following areas of finance?

Working capital management includes which one of the following?

In a general partnership,each partner is personally liable for:

The Sarbanes-Oxley Act in 2002 was primarily prompted by which one of the following from the 1990s?

What is the primary goal of financial management for a sole proprietorship?

Levi had an unexpected surprise when he returned home this morning.He found that a chemical spill from a local manufacturer had spilled over onto his property.The potential claim that he has against this manufacturer is that of a(n):

Financial Statements,Taxes,and Cash Flow

Working With Financial Statements

Introduction to Valuation: The Time Value of Money

Discounted Cash Flow Valuation

Interest Rates and Bond Valuation

Equity Markets and Stock Valuation

Net Present Value and Other Investment Criteria

Making Capital Investment Decisions

Some Lessons From Capital Market History

Risk and Return

Cost of Capital

Leverage and Capital Structure

Dividends and Dividend Policy

Raising Capital

Short-Term Financial Planning

Working Capital Management

International Aspects of Financial Management

Filters

Exam 1: Introduction to Financial Management

Which one of the following is a working capital decision?

If you accept a job as a domestic security analyst for a brokerage firm,you are most likely working in which one of the following financial areas?

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

A sole proprietorship:

Which one of the following is most apt to align management's priorities with shareholders' interests?

Which one of the following situations is most apt to create an agency conflict?

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

Theo's BBQ has $48,000 in current assets and $39,000 in current liabilities.Decisions related to these accounts as referred to as:

When conducting a financial analysis of a firm,financial analysts:

Which one of the following statements is correct?

A private placement is most apt to involve:

Limited liability companies are primarily designed to:

Which one of the following occupations best fits into the corporate area of finance?

Jamie is employed as a currency trader in the Japanese yen market.Her job falls into which one of the following areas of finance?

Working capital management includes which one of the following?

In a general partnership,each partner is personally liable for:

The Sarbanes-Oxley Act in 2002 was primarily prompted by which one of the following from the 1990s?

What is the primary goal of financial management for a sole proprietorship?

Levi had an unexpected surprise when he returned home this morning.He found that a chemical spill from a local manufacturer had spilled over onto his property.The potential claim that he has against this manufacturer is that of a(n):

Financial Statements,Taxes,and Cash Flow

Working With Financial Statements

Introduction to Valuation: The Time Value of Money

Discounted Cash Flow Valuation

Interest Rates and Bond Valuation

Equity Markets and Stock Valuation

Net Present Value and Other Investment Criteria

Making Capital Investment Decisions

Some Lessons From Capital Market History

Risk and Return

Cost of Capital

Leverage and Capital Structure

Dividends and Dividend Policy

Raising Capital

Short-Term Financial Planning

Working Capital Management

International Aspects of Financial Management

Filters