Fin 315 Chp 1

general partnership

two people go into an equally shared business

primary goal of financial management for a sole proprietorship

maximize the market value of the equity

Sarbanes-Oxley Act

require the corporate officers to personally attest that the financial statements are a fair representation of the company's financial results.

All over-the-counter sales occur in dealer markets

True

There must be at least one general partner

True

primary market

sale of newly issued stock by the company to such

cash management

should be assigned to the corporate treasurer rather than the controller

Being in charge of all external financing is being in charge of

capital structure management

Capital budgeting includes the evaluation of

size, timing, and risk of future cash flows

Advantage of the corporate form of organization is

the ability to raise larger sums of equity capital than other organizational forms

who can sell stock in the primary market?

the company

an agency issue is most apt to develop when

the control of a firm is separated from the firm's ownership

primary goal of financial management is to maximize

the market value of existing stock

The mixture of debt and equity is referred to as the firm's

capital structure

Sarbanes-Oxley act in 2002 was primarily prompted by which one of the following from the 1990s

Corporate accounting and financial fraud

Maria is the sole proprietor of an antique store that is located in a rented warehouse. The store has an outstanding loan with the local bank but no other debt obligations. There are no specific assets pledged as security for the loan. Due to a sudden and unexpected downturn in the economy, the store is unable to generate sufficient funds to pay the loan payments due to the bank. Which of the following options does the bank have to collect the money it is owed? I. Sell the inventory and apply the proceeds to the debt II. Sell the lighting fixtures from the building and apply the proceeds to the debt III. Withdraw funds from Maria's personal account at the bank to pay the store's debt IV. Sell any assets Maria personally owns and apply the proceeds to the store's debt

I, III, and IV only

Sole proprietorship:

Obtaining additional equity is dependent on the owner's personal finances.

corporate shareholders

ability to change corporation's bylaws

Security dealers

buy and sell from their own inventory

Function generally a responsibility to the corporate treasurer

capital expenditures