Finance ch. 3 quiz and LS questions

Jamie is employed as a currency trader in the Japanese yen market. Her job falls into which one of the following areas of finance? International finance
Jenna has been promoted and is now in charge of all external financing. In other words, she is in charge of: capital structure management.
Working capital management includes which one of the following? Determining which customers will be granted credit
Capital budgeting includes the evaluation of which of the following? Size, timing, and risk of future cash flows
Matt and Alicia created a firm that is a separate legal entity and will share ownership of that firm on a 75/25 basis. Which type of entity did they create if they have no personal liability for the firm’s debts? Corporation
Corporate shareholders: have the ability to change the corporation’s bylaws.
Which one of the following statements correctly applies to a sole proprietorship? Obtaining additional equity is dependent on the owner’s personal finances.
Maria is the sole proprietor of an antique store that is located in a rented warehouse. The store has an outstanding loan with the local bank but no other debt obligations. There are no specific assets pledged as security for the loan. Due to a sudden and unexpected downturn in the economy, the store is unable to generate sufficient funds to pay the loan payments due to the bank. Which of the following options does the bank have to collect the money it is owed? I. Sell the inventory and apply the proceeds to the debtII. Sell the lighting fixtures from the building and apply the proceeds to the debt III. Withdraw funds from Maria’s personal account at the bank to pay the store’s debt IV. Sell any assets Maria personally owns and apply the proceeds to the store’s debt I, III, IV
The Sarbanes-Oxley Act of 2002 has: essentially made officers of publicly traded firms personally responsible for the firm’s financial statements.
The primary goal of financial management is to maximize: the market value of existing stock.
An agency issue is most apt to develop when: the control of a firm is separated from the firm’s ownership.
The potential conflict of interest between a firm’s owners and its managers is referred to as which type of conflict? Agency
An employee has a claim on the cash flows of Martin’s Machines. This claim is defined as a claim by one of the firm’s: stakeholders.
who can sell stock in the primary market? the company
cash management should be assigned to the corporate treasurer rather than the controller
primary goal of financial management for a sole proprietorship maximize the market value of the equity
The mixture of debt and equity is referred to as the firm’s capital structure
Function generally a responsibility to the corporate treasurer capital expenditures
Sole proprietorship: Obtaining additional equity is dependent on the owner’s personal finances.
All over-the-counter sales occur in dealer markets True
an agency issue is most apt to develop when the control of a firm is separated from the firm’s ownership
There must be at least one general partner True
Security dealers buy and sell from their own inventory
Advantage of the corporate form of organization is the ability to raise larger sums of equity capital than other organizational forms
Being in charge of all external financing is being in charge of capital structure management
Sarbanes-Oxley act in 2002 was primarily prompted by which one of the following from the 1990s Corporate accounting and financial fraud
Tim has been promoted and is now in charge of all fixed asset purchases. In other words, Tim is in charge of: capital budgeting
Stadford Inc. is financed with 40 percent debt and 60 percent equity. This mixture of debt and equity is referred to as the firm’s: capital structure
Lester’s BBQ has $121,000 in current assets and $109,000 in current liabilities. These values as referred to as the firm’s: working capital
Margie opened a used bookstore and is both the 100 percent owner and the store’s manager. Which type of business entity does Margie own if she is personally liable for all the store’s debts? sole proprietorship
Todd and Cathy created a firm that is a separate legal entity and will share ownership of that firm on a 50-50 basis. Which type of entity did they create if they have no personal liability for the firm’s debts? corporation
The potential conflict of interest between a firm’s owner and its managers is referred to as which type of conflict? agency
The federal government has a tax claim on the cash flows of the The Window Store. This claim is defined as a claim by one of the firm’s: stakeholders
Which one of the following occupations best fits into the international area of finance? currency trader
Which one of the following individuals commonly use finance in the course of their job?I. chief financial officersII. accountants III. security analysts IV. strategic managers I, II, III, and IV
Which one of the following is a working capital decision? How much cash should the firm keep in reserve?
Which one of the following is a capital structure decision? establishing the preferred debt-equity level
The daily financial operations of a firm are primarily controlled by managing the: working capital
A sole proprietorship has its profits taxed as personal income
Which one of the following forms of business organization offers liability protection to some of its owners but not to all of its owners? limited liability company
Which one of the following best match the primary goal of financial management? increasing the market value of the firm
The goal of financial management is to increase the: current market value per share
What is the goal of financial management for a sole proprietorship? maximize the market value of the equity
Which one of the following situations is most apt to create an agency conflict? rejecting a profitable project to protect employee jobs
Which one of the following is most apt to create a situation where an agency conflict could arise? separating management from ownership
Which one of the following is most apt to align management’s priorities with shareholders’ interests? compensating manger with shares of stock that must be held for 3 years before the shares can be sold
Marti had an unexpected surprise when she ate her Lotsa Good cereal this morning. She found a piece of metal mixed in her cereal. The potential claim that Marti has against this firm is that of a(n): stakeholder
Which one of the following transactions occurred in the primary market? South Wind Products sold 1,000 shares of newly issued stock to Mike
Valerie bought 200 shares of Able stock today. Able stock has been trading for some time on the NYSE. Valerie’s purchase occurred in which market? secondary market
The goal of financial management is to maximize the firms value per share of stock
Which one of the following applies to a general partnership? Any one of the partners can be held solely liable for all of the partnership’s debt.
A corporation: a legal entity separate from its owners
Which one of the following functions is generally a responsibility assigned to the corporate treasurer? capital expenditures
Uptown Markets is financed with 45 percent debt and 55 percent equity. This mixture of debt and equity is referred to as the firm’s: capital structure
If you accept a job as a domestic security analyst for a brokerage firm, you are most likely working in which one of the following financial areas? investments
Which one of the following occupations best fits into the corporate area of finance? chief financial officer
Which one of the following functions should be assigned to the corporate treasurer rather than to the controller? Cash management
Theo’s BBQ has $48,000 in current assets and $39,000 in current liabilities. Decisions related to these accounts as referred to as: working capital management
The Sarbanes-Oxley Act: require the corporate officers to personally attest that the financial statements are a fair representation of the company’s financial results.
Limited liability companies are primarily designed to: provide limited liability while avoiding double taxation.
Which one of the following is contained in the corporate bylaws? Procedures for electing corporate directors
Will and Bill both enjoy sunshine, water, and surfboards. Thus, the two friends decided to create a business together renting surfboards, paddle boats, and inflatable devices in California. Will and Bill will equally share in the decision making and in the business profits or losses. Which type of business did they create if they both have full personal liability for the firm’s debts? general partnership
When conducting a financial analysis of a firm, financial analysts: rely solely on accounting information.
Which one of the following statements about a limited partnership is correct? There must be at least one general partner.
Jamie is employed as a commercial loan officer for a regional bank centered in the midwestern section of the U.S. Her job falls into which one of the following areas of finance? financial institutions
Which one of the following is an advantage of being a limited partner? Losses limited to capital invested
Which one of the following functions should be assigned to the treasurer rather than the controller? Cash management
Stadford, Inc. is financed with 40 percent debt and 60 percent equity. This mixture of debt and equity is referred to as the firm’s: capital structure
In a general partnership, each partner is personally liable for: the total debts of the partnership, even if he or she was unaware of those debts.
A limited liability company: prefers its profits be taxed as personal income to its owners.
Which one of the following best matches the primary goal of financial management? Increasing the market value of firm

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