| Which one of the following parties has ultimate control of a corporation? | Shareholders |
| Shareholder A sold shares of Maplewood Cabinets stock to Shareholder B. The stock is listed on the NYSE. This trade occurred in which one of the following? | Secondary, auction market. |
| Why should financial managers strive to maximize the current value per share of the existing stock? | Because they have been hired to represent the interests of the current shareholders. |
| 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 terms 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 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 a capital budgeting decision? | Deciding whether or not to purchase a new machine for the production line. |
| Which one of the following actions by a financial manager is most apt to create an agency problem? | Increasing current profits when doing so lowers the value of the firm’s equity. |
| Which one of the following is a capital structure decision? | Determining how much debt should be assumed to fund a project. |
| Which one of the following is an agency cost? | Hiring outside accountants to audit the company’s financial statements. |
