FIN 300 CH 1

One disadvantage of the corporate form of business ownership is the:

Double taxation of distributed profits

A business formed by two or more individuals who each have unlimited liability for all of the firm's business debts is called a:

General Partnership

Sally and Alicia are equal general partners in a business. They are content with their current management and tax situation but are uncomfortable with their unlimited liability. Which form of business entity should they consider as a replacement to their current arrangement assuming they wish to remain the only two owners of the business?

LLC

Which one of the following is a primary market transaction?

Sale of a new share of stock to an individual investor

Public offerings of debt and equity must be registered with the:

Securities and Exchange Commission.

Which one of the following is a working capital management decision?

Should the firm pay cash for a purchase or use the credit offered by the supplier?

Which one of the following statements is correct concerning the NYSE?

The listing requirements for the NYSE are more stringent than those of NASDAQ.

The decision to issue additional shares of stock is an example of:

a capital structure decision.

Financial managers should strive to maximize the current value per share of the existing stock to:

best represent the interests of the current shareholders.

Which one of the following terms is defined as the management of a firm's long-term investments?

capital budgeting

Which one of the following terms is defined as the mixture of a firm's debt and equity financing?

capital structure

The articles of incorporation:

describe the purpose of the firm and set forth the number of shares of stock that can be issued.

Corporate bylaws:

determine how a corporation regulates itself.

Which one of the following best states the primary goal of financial management?

maximize current value per share

Which one of the following functions should be the responsibility of the controller rather than the treasurer?

processing cost reports

Which one of the following parties has ultimate control of a corporation?

shareholders

A business owned by a solitary individual who has unlimited liability for the firm's debt is called a:

sole proprietorship

Shareholder A sold 500 shares of ABC stock on the New York Stock Exchange. This transaction:

was facilitated in the secondary market

An example of a capital budgeting decision is deciding:

whether or not to purchase a new machine for the production line.