Finance 300

the root cause of agency problems is conflict of interest… True or False? True
which business organization provides limited liability to all its owners? Corporation
the five basic principles of Finance are: 1) cash flow is what matters2) money has a time value3) risk requires a reward4) market prices are generally right5) conflicts of interest cause agency problems
shareholder weath maximization means maximizing the price of the existing common stock… True or False? True
a corporate treasurer is typically responsible for each of the following duties except: cost accounting, cash management, capital expenditures, credit management cost accounting
A limited partnership has limited liability for its owners? True or False? False
in a sole proprietorship, the owner is personally responsible without limitation for the liabilities incurred… True or False? True
An LLC is taxed like a partnership but provides limited liability for its owners, similar to a corporation… True or False True
there is no legal distinction made between the assets of the business and the personal assets of any of the owners in the limited partnership… True or False? False
the corporation is a legal entity separate from its owners; this it is possible for the corporation to continue even upon death of one or more shareholders True
what – long term investments a firm should undertake Capital budgeting
the financial manager most directly responsible for producing the company’s financial statements and directing its cost accounting functions is the…? Controller
The true owners of the corporation? Common stockholders
Profits represent money that can be spent, and as such, form the basis for determing the value of financial decisions False
Corporate managers should accept investment projects that maximize profits in the short run because of the time value of money… True or False? False
financial planning, corporate strategic planning, and controlling the firm’s cash flow Chief Financial Officer (CFO)
Cash and Credit management Treasurer
organize these in terms of costs to start up( highest to lowest):1. sole proprietorship2. general partnership3. limited partnership4. corporation 1. corporation2. limited partnership3. general partnership4. sole proprietorship
which form of business organization limits the liability of owners corporation
the 3 basic types of issues addressed by the study of finance are: 1. capital budgeting2. capital structure decisions3. working capital management
most important goal that a corporation should strive for? maximize shareholder wealth
owners of a corporation enjoy limited liability… True or False? True
all of the following contributed to recent financial crises EXCEPT:a. focusing on the short runb. excessive risk taking due to underestimation of riskc. relying on the efficiency of financial marketsd. focusing on earnings instead of cash flow C. relying on the efficiency of financial markets
one problem with maximization of shareholder wealth as a goal is that it ignores risk taken by the firms financial decisions…. True or False? False
which of the following categories of owners enjoy limited liability? A. all partners in a limited partnershipB. in a partnership, only the general partnersC. common shareholders in a corporationD. only B and C above C. common stockholders of a coroporation
A corporation has the greatest ability to attract new capital? True or False True
a LLC is taxed like a partnership but provides limited liability for its owners, similar to a corporation… True or False True
Conflict of interest is the root cause of agency problems… true or false? True
determining how a firm should raise money to fund its long-term investments is referred to as… Capital Structure Decisions
each financial decision made by a corporate manager can be evaluated by its direct impact on the corporation’s stock price… True or False? False
stockholders react to poor investment or dividend decisions by causing the total value of the firms stock to fall, and they re act to good decisions by bidding the price of the stock up… True or False True
which of the following goals of the firm are equal to the maximization of shareholder wealth?A. profit maximizationB. risk minimizationC. maximization of the total market value of the firms common stockD. none of the above C. maximization of the total market value of the firms common stock
investors want a return that satifies the following expectations:A. additional return for taking on riskB. return for delaying consumptionC. additional return for accepting dividends rather than capital gainsD. both A and B D. both A and B
Common stockholders may use financial ratios to monitor manager actions to help lessen agency problems… True or False? True

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