Finance 331 - EXAM 1

Which one of the following functions should be assigned to the corporate treasurer rather than to the controller? A.) Data Processing B.) Cost Accounting C.) Cash Management D.) Financial Accounting

Cash Management

The potential conflict of interest between a firm's owners and its managers is referred to as which type of conflict? A.) Formative B.) Agency C.) Structural D.) Organizational

Agency

One advantage of the corporate form of organization is the: A.) taxation of the corporate profits. B.) ability to raise larger sums of equity capital than other organizational forms. C.) double taxation of profits. D.) ease of formation compared to other organizational forms.

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

Theo's BBQ has $48,000 in current assets and $39,000 in current liabilities. Decisions related to these accounts as referred to as: A.) capital budgeting decisions. B.) working capital management. C.) capital structure decisions. D.) fixed account structure.

working capital management.

Uptown Markets is financed with 45 percent debt and 55 percent equity. This mixture of debt and equity is referred to as the firm's: A.) capital structure. B.) capital budget. C.) working capital. D.) asset allocation.

capital structure.

One example of a primary market transaction would be the: A.) sale by Terry of 50,000 shares of stock to his brother. B.) sale of 5,000 shares of stock owned by a corporate CEO to his son. C.) sale of 100 shares of stock by Maria to her best friend. D.) sale of 1,000 shares of newly issued stock by Alt Company to Miquel.

sale of 1,000 shares of newly issued stock by Alt Company to Miquel.

The primary goal of financial management is to maximize: A.) the market value of existing stock. B.) current dividends. C.) market share. D.) current profits.

the market value of existing stock.