FIN 3000 Chapter 1 HW

A business created as a distinct legal entity and treated as a legal "person" is called a(n): sole proprietorship general partnership unlimited liability company limited partnership corporation

corporation

Agency problems are most associated with: corporations limited partnerships general partnerships sole proprietorships limited liability companies

corporations

A business owned by a solitary individual who has unlimited liability for the firm's debt is called a: sole proprietorship limited partnership limited liability company general partnership corporation

sole proprietorship

Which one of the following best illustrates that the management of a firm is adhering to the goal of financial management? An increase in the amount of the quarterly dividend An increase in the market value per share An increase in the number of share outstanding A decrease in the per unit production costs A decrease in the net working capital

An increase in the market value per share

Which of the following individuals have unlimited liability for a firm's debts based on their ownership interest? Both general partners and sole proprietors Only general partners All stockholders Both limited and general partners Only sole proprietors

Both general partners and sole proprietors

Which one of the following terms is defined as the management of a firm's long-term investments? Agent cost analysis Financial allocation Working capital management Capital structure Capital budgeting

Capital budgeting

Which one of the following statements is correct? Shareholders are protected from all potential loses. Corporations can have an unlimited life. The majority of firms in the U.S. are structured as corporations. Corporate profits are taxable income to the shareholders when earned. Shareholders directly elect the corporate president.

Corporations can have an unlimited life.

Which one of the following questions is a working capital management question? Should the company close one of its stores? How much should the company borrow to buy a new building? Should the company issue new shares of stock or borrow money? How much inventory should be on hand for immediate sale? Should the company update or replace its older equipment?

How much inventory should be on hand for immediate sale?

Which one of the following questions is least likely to be addressed by financial managers? How should a product be marketed? How much cash should the firm keep on hand? Should the firm borrow more money? Should the firm acquire new equipment? Should the customers be given 30 or 45 days to pay for their credit purchases?

How should a product be marketed?

Which one of the following best states the primary goal of financial management? Minimize operational costs while maximizing fir efficiency Maximize the current value per share Maintain steady growth while increasing current profits Maximize current dividends per share Increase cash flow and avoid financial distress

Maximize the current value per share

Shareholder A sold shares of Maplewood Cabinets to Shareholder B. The stock is listed on the NYSE. This trade occurred in which one of the following? Secondary, OTC market Secondary, auction market Primary, auction market Primary, dealer market Secondary, dealer market

Secondary, auction market

Which one of the following statements concerning a sole proprietorship is correct? Transferring ownership of a sole proprietorship is easier than transferring ownership of a corporation A sole proprietor can generally raise large sums of capital quite easily A sole proprietorship is the most regulated form of organization The life of a sole proprietorship is limited A sole proprietorship is taxed the same as a C corporation

The life of a sole proprietorship is limited

Self-Reflection: I have thoroughly read the entire syllabus, and understand all policies/components of the course. No Yes

Yes

The decision to issue additional shares of stock is an example of: working capital management capital budgeting a net working capital decision a capital structure decision a controllers duties

a capital structure decision

Financial managers should strive to maximize the current value per share of the existing stock to: Increase the current dividends per share guarantee the company will grow in size at the maximum possible rate increase employee salaries provide managers with shares of stock as part of their compensation best represent the interests of the current shareholders

best represent the interests of the current shareholders

A business formed by two or more individuals who each have unlimited liability for all of the firm's business debts is called a: corporation limited partnership general partnership sole proprietorship limited liability company

general partnership

A limited partnership: consists solely of limited partners can opt to be taxed as a corperation has at least one partner who has liability for all of the partnership's debts terminates at the death of any one limited partner has an unlimited life

has at least one partner who has liability for all of the partnership's debts

A business partner whose potential financial loss in the partnership will not exceed his or her investment in that partnership is called a: limited partner zero partner corporate shareholder sole proprietor general partner

limited partner

The Sarbanes-Oxley Act of 2002 is a governmental response to: decreasing corporate profits a weakening economy management greed and abuses the terrorist attacks on 9/11/2001 deregulation of the stock exchange

management greed and abuses

Decisions made by financial managers should primarily focus on increasing: growth rate of the firm market value per share of outstanding stock total sales gross profit per unit produced size of the firm

market value per share of outstanding stock