Finance CH 1

Which one of the following parties can sell shares of ABC stock in the primary market? ABC Company
Which one of the following is a capital structure decision? Establishing the preferred debt-equity level
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.
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
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.
The daily financial operations of a firm are primarily controlled by managing the: Working Capital
Which of the following are effective means of aligning management goals with shareholder interests?I. Employee stock optionsII. Threat of a takeoverIII. Management bonuses tied to performance goalsIV. Threat of a proxy fight I, II, III, and IV
The Sarbanes-Oxley Act in 2002 was prompted by which one of the following from the 1990s? Corporate accounting and financial fraud
Capital budgeting includes the evaluation of which of the following? Size, timing, and risk of future cash flows
Which of the following are advantages of the corporate form of organization?I. Ability to raise large sums of equity capitalII. Ease of ownership transferIII. Profits taxed at the corporate levelIV. Limited liability for all owners I, II, and IV only
Which one of the following statements is correct? All stock trades between existing shareholders are secondary market transactions.
Beginning in 2011, the Dodd-Frank Wall Street Reform and Consumer Protection Act requires corporations with a market value over ________ to allow a nonbinding shareholder vote on executive pay. $75,000,000
Limited liability companies are primarily designed to: provide limited liability while avoiding double taxation.
Corporate shareholders: have the ability to change the corporation’s bylaws.
Which one of the following correctly defines a common chain of command within a corporation? The controller reports directly to the chief financial officer.
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.
Which one of the following statements related to securities dealers is correct? Dealers buy and sell from their own inventory.
Which one of the following best matches the primary goal of financial management? Increasing the market value of the firm
Which one of the following is most apt to align management’s priorities with shareholders’ interests? Compensating managers with shares of stock that must be held for three years before the shares can be sold
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
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 profits or losses. Which type of business did they create if they both have full personal liability for the firm’s debts? General partnership
Which one of the following statements about a limited partnership is correct? There must be at least one general partner.
Which one of the following is a general characteristic of a securities broker? Trades listed securities in an auction market
Which one of the following statements is correct? NASDAQ has more listed stocks than does the NYSE.
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

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