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1 | |
A secondary market transaction can occur in either a dealer market or an auction market. |
| | A) | True |
| | B) | False |
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2 | |
Control of a firm ultimately rests with the stockholders. |
| | A) | True |
| | B) | False |
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3 | |
It is generally easier to form a sole proprietorship than it is to form a corporation. |
| | A) | True |
| | B) | False |
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4 | |
One advantage of the corporate form of organization is that you can buy shares in a corporation such as Wal-Mart without worrying about being held personally liable for the corporation's liabilities. |
| | A) | True |
| | B) | False |
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5 | |
A financial manager must be concerned with three basic areas: Capital budgeting, capital structure, and working capital. |
| | A) | True |
| | B) | False |
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6 | |
Which of the following responses best completes the following: The duties of a working capital manager include |
| | A) | Deciding how to raise the money required to fund a project |
| | B) | Choosing how much inventory a firm should invest in |
| | C) | Deciding the amount of dividends a firm should pay out |
| | D) | Deciding which projects a firm should undertake |
| | E) | Deciding what fixed assets to purchase |
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7 | |
In a ____________, none of the owners are offered the protection of limited liability. |
| | A) | sole proprietorship |
| | B) | limited liability company |
| | C) | corporation |
| | D) | limited partnership |
| | E) | S corporation |
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8 | |
Which of the following is the BEST description of the goal of the financial manager in a corporation where shares are publicly traded? |
| | A) | Maximize sales |
| | B) | Maximize profits |
| | C) | Avoid financial distress |
| | D) | Maintain steady earnings growth |
| | E) | Maximize the current value per share of the existing stock |
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9 | |
Which of the following is an answer to "What are the duties of a financial manager?"
I. Deciding how much interest to pay the holders of the corporation's bonds II. Deciding the mix of long-term debt and equity
III. Deciding which projects a firm should undertake IV. Deciding how much short-term debt to use |
| | A) | I and II only |
| | B) | I, II, and III only |
| | C) | II and III only |
| | D) | II, III, and IV only |
| | E) | I, II, III, and IV |
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