Exam 1: An Overview of Financial Management

A stock's market price would equal its intrinsic value if all investors had all the information that is available about the stock.In this case the stock's market price would equal its intrinsic value.

(True/False)

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Question 21

If a stock's market price is above its intrinsic value,then the stock can be thought of as being undervalued,and it would be a good buy.

(True/False)

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Question 22

In order to maximize its shareholders' value,a firm's management must attempt to maximize the stock price in the long run,or the stock's "intrinsic value."

(True/False)

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Question 23

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

(Multiple Choice)

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Question 24

Which of the following statements is CORRECT?

(Multiple Choice)

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Question 25

Which of the following statements is CORRECT?

(Multiple Choice)

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Question 26

Which of the following statements is CORRECT?

(Multiple Choice)

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Question 27

Which of the following statements is CORRECT?

(Multiple Choice)

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Question 28

For a stock to be in equilibrium as the book defines it,its market price should exceed its intrinsic value.

(True/False)

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Question 29

Which of the following actions would be likely to reduce potential conflicts of interest between stockholders and managers?

(Multiple Choice)

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Question 30

One disadvantage of forming a corporation rather than a partnership is that this makes it more difficult for the firm's investors to transfer their ownership interests.

(True/False)

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Question 31

There are many types of unethical business behavior.One example is where executives provide information that they know is incorrect to banks and to stockholders.It is illegal to provide such information to banks,but it is not illegal to provide it to stockholders because they are the owners of the firm,not outsiders.

(True/False)

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Question 32

The term "marginal investor" means an investor who is active in the market and would tend to buy a stock if its price fell and sell it if it rose,barring any new information coming out about the stock.It is the "marginal investor" who determines the actual stock price.

(True/False)

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Question 33

It is generally less expensive to form a corporation than a proprietorship because,with a proprietorship,extensive legal documents are required.

(True/False)

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Question 34

As a result of financial scandals occurring during the past decade,there has been a strong push to improve business ethics.

(True/False)

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Question 35

Which of the following statements is CORRECT?

(Multiple Choice)

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Question 36

Charleston Corporation (CC)now operates as a "regular" corporation,but it is considering a switch to S Corporation status.CC is owned by 100 stockholders who each hold 1% of the stock,and each faces a personal tax rate of 35%.The firm earns $3,700,000 per year before taxes,and since it has no need for retained earnings,it pays out all of its earnings as dividends.Assume that the corporate tax rate is 34% and the personal tax rate is 35%.How much more (or less)spendable income would each stockholder have if the firm elected S Corporation status?

(Multiple Choice)

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Question 37

Which of the following mechanisms would be most likely to help motivate managers to act in the best interests of shareholders?

(Multiple Choice)

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Question 38

Which of the following statements is CORRECT?

(Multiple Choice)

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Question 39

Some partners in a partnership may have different rights,privileges,and responsibilities than other partners.

(True/False)

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Question 40

Showing 21 - 40 of 65

Exam 1: An Overview of Financial Management

A stock's market price would equal its intrinsic value if all investors had all the information that is available about the stock.In this case the stock's market price would equal its intrinsic value.

If a stock's market price is above its intrinsic value,then the stock can be thought of as being undervalued,and it would be a good buy.

In order to maximize its shareholders' value,a firm's management must attempt to maximize the stock price in the long run,or the stock's "intrinsic value."

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

Which of the following statements is CORRECT?

Which of the following statements is CORRECT?

Which of the following statements is CORRECT?

Which of the following statements is CORRECT?

For a stock to be in equilibrium as the book defines it,its market price should exceed its intrinsic value.

Which of the following actions would be likely to reduce potential conflicts of interest between stockholders and managers?

One disadvantage of forming a corporation rather than a partnership is that this makes it more difficult for the firm's investors to transfer their ownership interests.

​The term "marginal investor" means an investor who is active in the market and would tend to buy a stock if its price fell and sell it if it rose,barring any new information coming out about the stock.It is the "marginal investor" who determines the actual stock price.

It is generally less expensive to form a corporation than a proprietorship because,with a proprietorship,extensive legal documents are required.

As a result of financial scandals occurring during the past decade,there has been a strong push to improve business ethics.

Which of the following statements is CORRECT?

Which of the following mechanisms would be most likely to help motivate managers to act in the best interests of shareholders?

Which of the following statements is CORRECT?

Some partners in a partnership may have different rights,privileges,and responsibilities than other partners.

Financial Markets and Institutions

Financial Statements,cash Flow and Taxes

Analysis of Financial Statements

Time Value of Money

A Continuous-Compounding-And-Discounting

Interest Rates

Bonds and Their Valuation

Risk and Rates of Return

Stocks and Their Valuation

The Cost of Capital

The Basics of Capital Budgeting

Cash Flow Estimation and Risk Analysis

Capital Structure and Leverage

Distributions to Shareholders: Dividends and Share Repurchases

Working Capital Management

Financial Planning and Forecasting

Multinational Financial Management

Zero-Coupon-Bonds

Bankruptcy and Reorganization

Calculating Beta Coefficients

Using the CAPM to Estimate the Risk-Adjusted Cost of Capital

Techniques for Measuring Beta Risk

Comparing Mutually Exclusive Projects with Unequal Lives

Degree of Leverage

Filters

The term "marginal investor" means an investor who is active in the market and would tend to buy a stock if its price fell and sell it if it rose,barring any new information coming out about the stock.It is the "marginal investor" who determines the actual stock price.