Question 1

General partners have unrestricted transferability of ownership,while limited partners must have the consent of all partners to transfer their ownership.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is NOT true for limited partnerships?

Accepted Answer

A) Limited partners can only manage the business. 
B) One general partner must exist who has unlimited liability. 
C) Only the name of general partners can appear in the name of the firm. 
D) Limited partners may sell their interest in the company. 
A) Limited partners can only manage the business. 
B) One general partner must exist who has unlimited liability. 
C) Only the name of general partners can appear in the name of the firm. 
D) Limited partners may sell their interest in the company.

Question 3

The sole proprietorship is the same as the individual for liability purposes.

Accepted Answer

A) True 
 B)False

Question 4

For markets to be efficient,price adjustments to new information must be correct.

Accepted Answer

A) True 
 B)False

Question 5

Why do investors prefer receiving cash sooner rather than later,according to finance theory?

Accepted Answer

A) Incremental profits are greater than accounting profits. 
B) Money received earlier can be reinvested and returns can be increased. 
C) Tax considerations are important when investing. 
D) Diversification leads to increased value. 
A) Incremental profits are greater than accounting profits. 
B) Money received earlier can be reinvested and returns can be increased. 
C) Tax considerations are important when investing. 
D) Diversification leads to increased value.

Question 6

Which of the following should be considered when assessing the financial impact of business decisions?

Accepted Answer

A) The amount of projected earnings 
B) The risk-return tradeoff 
C) The timing of projected earnings;i.e. ,when they are expected to occur 
D) The amount of the investment in a given project 
E) All of the above 
A) The amount of projected earnings 
B) The risk-return tradeoff 
C) The timing of projected earnings;i.e. ,when they are expected to occur 
D) The amount of the investment in a given project 
E) All of the above

Question 7

Purchasing a security of a company that is issuing their stock for the first time publicly would be considered:

Accepted Answer

A) a secondary market transaction. 
B) an initial public offering. 
C) a seasoned new issue. 
D) both A and B. 
A) a secondary market transaction. 
B) an initial public offering. 
C) a seasoned new issue. 
D) both A and B.

Question 8

Which of the following types of business forms is the most ideal in terms of attracting new capital?

Accepted Answer

A) Sole proprietorship 
B) Limited partnership 
C) General partnership 
D) A public corporation 
A) Sole proprietorship 
B) Limited partnership 
C) General partnership 
D) A public corporation

Question 9

A sole proprietorship is the most desirable business form in all circumstances.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following reasons is most responsible for corporations being the most important form of business organization in the United States?

Accepted Answer

A) Corporations have limited life. 
B) Stockholders have unlimited liability. 
C) Corporations are subject to less government regulation than the other forms of business organization. 
D) Corporations have the ability to raise larger sums of capital than the other forms of business organization. 
E) Corporations are subjected to less taxation than the other forms of business organization. 
A) Corporations have limited life. 
B) Stockholders have unlimited liability. 
C) Corporations are subject to less government regulation than the other forms of business organization. 
D) Corporations have the ability to raise larger sums of capital than the other forms of business organization. 
E) Corporations are subjected to less taxation than the other forms of business organization.

Question 11

For the risk-averse financial manager,the more risky a given course of action,the higher the expected return must be.

Accepted Answer

A) True 
 B)False

Question 12

The goal of profit maximization ignores the timing of profit.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is NOT a principle of basic financial management?

Accepted Answer

A) Risk/return tradeoff 
B) Incremental cash flow counts 
C) Efficient capital markets 
D) Profit is king 
A) Risk/return tradeoff 
B) Incremental cash flow counts 
C) Efficient capital markets 
D) Profit is king

Question 14

In measuring value,the focus should be on:

Accepted Answer

A) cash flow. 
B) accounting profits. 
C) time value of money. 
D) earnings per share. 
A) cash flow. 
B) accounting profits. 
C) time value of money. 
D) earnings per share.

Question 15

Difficulty in finding profitable projects is due to:

Accepted Answer

A) social responsibility. 
B) competitive markets. 
C) ethical dilemmas. 
D) opportunity costs. 
A) social responsibility. 
B) competitive markets. 
C) ethical dilemmas. 
D) opportunity costs.

Question 16

A limited liability company (LLC)is:

Accepted Answer

A) able to retain limited liability for owners. 
B) taxed like a corporation. 
C) a cross between a partnership and a corporation. 
D) A and C. 
E) all of the above. 
A) able to retain limited liability for owners. 
B) taxed like a corporation. 
C) a cross between a partnership and a corporation. 
D) A and C. 
E) all of the above.

Question 17

What is the chief disadvantage of the sole proprietorship as a form of business organization when compared to the corporate form?

Accepted Answer

A) Sole proprietorships are subject to double taxation of profits. 
B) The cost of formation. 
C) Inadequate profit sharing. 
D) Owners have unlimited liability. 
A) Sole proprietorships are subject to double taxation of profits. 
B) The cost of formation. 
C) Inadequate profit sharing. 
D) Owners have unlimited liability.

Question 18

The goal of the firm should be:

Accepted Answer

A) maximization of profits. 
B) maximization of shareholder wealth. 
C) maximization of consumer satisfaction. 
D) maximization of sales. 
A) maximization of profits. 
B) maximization of shareholder wealth. 
C) maximization of consumer satisfaction. 
D) maximization of sales.

Question 19

Shareholder wealth is measured by the market value of the firm's common stock.

Accepted Answer

A) True 
 B)False

Question 20

Consider the following equally likely project outcomes:

Accepted Answer

A) Project Y has less uncertainty than Project X. 
B) Project X has more variability than Project Y. 
C) A and B. 
D) Since Projects X and Y have the same expected outcomes of $500,investors will view them as identical in value. 
A) Project Y has less uncertainty than Project X. 
B) Project X has more variability than Project Y. 
C) A and B. 
D) Since Projects X and Y have the same expected outcomes of $500,investors will view them as identical in value.

General partners have unrestricted transferability of ownership,while limited partners must have the consent of all partners to transfer their ownership.

Which of the following is NOT true for limited partnerships?

The sole proprietorship is the same as the individual for liability purposes.

For markets to be efficient,price adjustments to new information must be correct.

Why do investors prefer receiving cash sooner rather than later,according to finance theory?

Which of the following should be considered when assessing the financial impact of business decisions?

Purchasing a security of a company that is issuing their stock for the first time publicly would be considered:

Which of the following types of business forms is the most ideal in terms of attracting new capital?

A sole proprietorship is the most desirable business form in all circumstances.

Which of the following reasons is most responsible for corporations being the most important form of business organization in the United States?

For the risk-averse financial manager,the more risky a given course of action,the higher the expected return must be.

The goal of profit maximization ignores the timing of profit.

Which of the following is NOT a principle of basic financial management?

In measuring value,the focus should be on:

Difficulty in finding profitable projects is due to:

A limited liability company (LLC)is:

What is the chief disadvantage of the sole proprietorship as a form of business organization when compared to the corporate form?

The goal of the firm should be:

Shareholder wealth is measured by the market value of the firm's common stock.

Consider the following equally likely project outcomes:

Firms and the Financial Market

Understanding Financial Statements, taxes, and Cash Flows

Financial Analysis-Sizing up Firm Performance

Time Value of Money-The Basics

The Time Value of Money-Annuities and Other Topics

An Introduction to Risk and Return-History of Financial Market Returns

Risk and Return-Capital Market Theory

Debt Valuation and Interest Rates

Stock Valuation

Investment Decision Criteria

Analyzing Project Cash Flows

Risk Analysis and Project Evaluation

The Cost of Capital

Capital Structure Policy

Dividend Policy

Financial Forecasting and Planning

Working Capital Management

International Business Finance

Corporate Risk Management

Filters

Exam 1: Getting Started-Principles of Finance

General partners have unrestricted transferability of ownership,while limited partners must have the consent of all partners to transfer their ownership.

Which of the following is NOT true for limited partnerships?

The sole proprietorship is the same as the individual for liability purposes.

For markets to be efficient,price adjustments to new information must be correct.

Why do investors prefer receiving cash sooner rather than later,according to finance theory?

Which of the following should be considered when assessing the financial impact of business decisions?

Purchasing a security of a company that is issuing their stock for the first time publicly would be considered:

Which of the following types of business forms is the most ideal in terms of attracting new capital?

A sole proprietorship is the most desirable business form in all circumstances.

Which of the following reasons is most responsible for corporations being the most important form of business organization in the United States?

For the risk-averse financial manager,the more risky a given course of action,the higher the expected return must be.

The goal of profit maximization ignores the timing of profit.

Which of the following is NOT a principle of basic financial management?

In measuring value,the focus should be on:

Difficulty in finding profitable projects is due to:

A limited liability company (LLC)is:

What is the chief disadvantage of the sole proprietorship as a form of business organization when compared to the corporate form?

The goal of the firm should be:

Shareholder wealth is measured by the market value of the firm's common stock.

Consider the following equally likely project outcomes:

Firms and the Financial Market

Understanding Financial Statements, taxes, and Cash Flows

Financial Analysis-Sizing up Firm Performance

Time Value of Money-The Basics

The Time Value of Money-Annuities and Other Topics

An Introduction to Risk and Return-History of Financial Market Returns

Risk and Return-Capital Market Theory

Debt Valuation and Interest Rates

Stock Valuation

Investment Decision Criteria

Analyzing Project Cash Flows

Risk Analysis and Project Evaluation

The Cost of Capital

Capital Structure Policy

Dividend Policy

Financial Forecasting and Planning

Working Capital Management

International Business Finance

Corporate Risk Management

Filters