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

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?

Jane Doe,who has substantial personal wealth and income,is considering the possibility of starting a new business in the chemical waste management field.She will be the sole owner,and she has enough funds to finance the operation.The business will have a relatively high degree of risk,and it is expected that the firm will incur losses for the first few years.However,the prospects for growth and positive future income look good,and Jane plans to have the firm pay out all of its income as dividends to her once it is well established.Which of the legal forms of business organization would probably best suit her needs?

Which of the following statements is CORRECT?

​Which of the following statements is CORRECT?

The disadvantages associated with a proprietorship are similar to those under a partnership.One exception relates to the more formal nature of the partnership agreement and the commitment of all partners' personal assets.As a result,partnerships do not have difficulty raising large amounts of capital.

? Which of the following is a primary market transaction?

There are three primary disadvantages of a regular partnership: (1)unlimited liability, (2)limited life of the organization,and (3)difficulty of transferring ownership.These combine to make it difficult for partnerships to attract large amounts of capital and thus to grow to a very large size.

The major advantage of a regular partnership or a corporation as a form of business organization is the fact that both offer their owners limited liability,whereas proprietorships do not.

Which of the following would be most likely to lead to higher interest rates on all debt securities in the economy?

Which of the following statements is CORRECT?

Suppose the U.S.Treasury announces plans to issue $50 billion of new bonds.Assuming the announcement was not expected,what effect,other things held constant,would that have on bond prices and interest rates?

Which of the following statements is CORRECT?

Which of the following statements is CORRECT?

​ Which of the following statements is NOT CORRECT?

Which of the following statements is CORRECT?

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

Cheers Inc.operates as a partnership.Now the partners have decided to convert the business into a regular corporation.Which of the following statements is CORRECT?

Which of the following statements is CORRECT?

Which of the following statements is CORRECT?

​You recently sold 200 shares of Apple stock to your brother.The transfer was made through a broker,and the trade occurred on the NYSE.This is an example of: