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1 | |
Shareholders' equity is best defined as: |
| | A) | the total book value of a firm's assets as reflected on the firm's balance sheet. |
| | B) | the summation of the accounts listed on the left-hand side of a balance sheet. |
| | C) | a residual claim on the value of a firm's assets after the firm's debts have been paid. |
| | D) | the total amount received by a firm in exchange for shares of stock. |
| | E) | the distribution of a firm's profits to its shareholders. |
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2 | |
Tasks related to tax management, cost accounting, financial accounting, and data processing are the primary responsibilities of which corporate officer? |
| | A) | treasurer |
| | B) | corporate director |
| | C) | controller |
| | D) | chairman of the board |
| | E) | vice president of operations |
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3 | |
When deciding whether or not to build a new factory, a financial manager should consider the _____ of the related cash flows. |
| | A) | timing, but not the risk |
| | B) | amount, but not the timing |
| | C) | timing and amount, but not the risk |
| | D) | amount and the risk, but not the timing |
| | E) | amount, the timing, and the risk |
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4 | |
Limited liability may be available for an owner in which of the following types of organizations?I. sole proprietorship
II. limited partnership
III. corporation
IV. limited liability company |
| | A) | IV only |
| | B) | II and IV only |
| | C) | I and III only |
| | D) | II, III, and IV only |
| | E) | I, II, III, and IV |
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5 | |
Susan would like to form a business wherein she can avoid double taxation, minimize the amount of governmental regulations to which her business will be subjected, maintain total control over the business, and incur the least amount of costs in the formation of the business entity. Susan should form a: |
| | A) | sole proprietorship. |
| | B) | general partnership. |
| | C) | limited partnership. |
| | D) | limited liability company. |
| | E) | corporation. |
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6 | |
Which one of the following parties selects the senior managers in a corporation? |
| | A) | shareholders |
| | B) | board of directors |
| | C) | chairman of the board |
| | D) | company president |
| | E) | chief executive officer |
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7 | |
The primary goal of a financial manager should be to maximize the: |
| | A) | current profits. |
| | B) | firm's revenue. |
| | C) | growth rate of the firm. |
| | D) | market value of the existing owners' equity. |
| | E) | size of the firm. |
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8 | |
A successful senior corporate manager who continues to operate in a manner consistent with the best interests of the shareholders tends to:I. be promoted.
II. receive salary increases.
III. be ousted by the shareholders.
IV. be highly marketable. |
| | A) | III only |
| | B) | I and II only |
| | C) | II and IV only |
| | D) | I, II, and IV only |
| | E) | I, II, III, and IV |
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9 | |
Which one of the following is best designed to help eliminate the agency problem? |
| | A) | fixed salaries for all corporate executives |
| | B) | executive bonuses based on increased sales |
| | C) | stock options used as management compensation |
| | D) | management promotions based on the number of employees managed |
| | E) | raises based on the value of the assets managed |
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10 | |
Which one of the following statements concerning the money markets is correct? |
| | A) | The money markets are primarily broker markets. |
| | B) | Money markets trade both long and short-term debt securities. |
| | C) | Government security dealers are large players in the money markets. |
| | D) | The money markets are solely primary markets. |
| | E) | The money markets trade only debt securities issued by the government. |
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