Finance

Which term is defined as the management of a firm’s long-term investments? Capital budgeting
Which one of the following terms is defined as the mixture of a firm’s debt and equity financing? Capital structure
Which one of the following is defined as a firm’s short-term assets and its short-term liabilities? Working capital
A business owned by a solitary individual who has unlimited liability for its debt is called a: Sole proprietorship
A business formed by two or more individuals who each have unlimited liability for all of the firm’s business debts is called a: General partnership
A business partner whose potential financial loss in the partnership will not exceed his or her investment in that partnership is called a: Limited partner
A business created as a distinct legal entity and treated as a legal “person” is called a: Corporation
Which one of the following terms is defined as a conflict of interest between the corporate shareholders and the corporate managers? Agency problem
A stakeholder is: Any person or entity other than a stockholder or creditor who potentially has a claim on the cash flows of a firm.
Which of the following questions are addressed by financial managers? I. How should a product be marketed?II. Should customers be given 30 or 45 days to pay for their credit purchases?III. Should the firm borrow more money?IV. Should the firm acquire new equipment? II, III, and IV only.
Which one of the following functions should be the responsibility of the controller rather than the treasurer? Income tax returns
The controller of a corporation generally reports directly to the: Vice president of finance
Which one of the following correctly defines the upward chain of command in a typical corporate organizational structure? The treasurer reports to the vice president of finance
Which one of the following is a capital budgeting decision? Deciding whether or not to purchase a new machine for the production line
Which one of the following is a capital structure decision? Determining how much debt should be assumed to fund a project
The decision to issue additional shares of stock is an example of which one of the following? Capital structure decision
Which one of the following is a working capital management decision? Determining whether to pay cash for a purchase or use the credit offered by the supplier
Which one of the following statements concerning a sole proprietorship is correct? The owner of a sole proprietorship is personally responsible for all of the company’s debts
Which one of the following best describes the primary advantage of being a limited partner instead of a general partner? Maximum loss limited to the capital invested
A general partner: Is personally responsible for all the partnership debts
A limited partnership: Has a greater ability to raise capital than a sole proprietorship.
Corporate bylaws: Determine how a corporation regulates itself.
Which one of the following business types is best suited to raising large amounts of capital? Corporation
Which type of business organization has all the respective rights and privileges of a legal person? Corporation
Which one of the following best states the primary goal of financial management? Maximize the current value per share.
Which form of business structure is most associated with agency problems? Corporation
Which one of the following is an agency cost? Hiring outside accountants to audit the company’s financial statements.
Which one of the following is a primary market transaction? Sale of a new share of stock to an individual investor
Shareholder A sold 500 shares of ABC stock on the New York Stock Exchange. This transaction: Was facilitated in the secondary market
Which one of these is a working capital management decision? Determining the minimum level of cash to be kept in a checking account.
The growth of both sole proprietorships and partnerships is frequently limited by their: Inability to raise cash
Corporate dividends are: Taxable as personal income when received by shareholders even though that income was taxed at the corporate level
Financial managers should primarily focus on the interests of: Shareholders

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