bussiness finace

The goal of the financial management is to increase the value of ______.

the existing shares of the stock

According to Figure 1.2, where does cash generated by a corporation typically go?

to pay corporate taxes paid to shareholders and creditors reinvested in the firm

True or false: A corporation borrows money in its own name.

true

True or false: In a large corporation, stockholders and managers are usually separate groups.

true

A partnership must have at least _______ owners.

two

A sole proprietor has ______ personal liability for all business debts and obligations.

unlimited

A general partnership has which of the following characteristics?

All the partners share in gains or losses of the partnership. Each owner has unlimited liability for all firm debts.

According to the textbook, which of the following is not one of the three main questions to be addressed if you wanted to start your own business?

How many employees will I need?

Business finance is broadly concerned with which of the following?

How to manage day-to-day finances of the firm? Which long-term investment to make? How to finance long-term investments?

Why don't large businesses organize as sole proprietorships or partnerships?

It can be difficult to raise cash for investment in these forms, and that limits the ability of the business to grow.

Which of the following are true of a sole proprietorship?

It is one of the simplest types of businesses to form. A proprietorship has a limited life.

In an over-the-counter market, which of the following is true?

Most of the buying and selling is done by the dealer. Many dealers are also connected electronically.

Is profit maximization the primary objective of a business?

No; profit maximization may not take into account other strategic objectives necessary to maximize shareholder value.

Which of the following are key questions for investments?

What are the risks and rewards associated with investing? What determines the price of a financial asset? What is the best mixture of financial assets to hold?

An organization must prepare ______ and bylaws when forming a corporation.

articles of incorporation

The federal government taxes which of the following?

corporate earnings and shareholder dividends

Public limited companies and joint stock companies are other names for ______.

corporations

Which of the following is a disadvantage of sole proprietorships and partnerships?

difficulty of transferring ownership

When a corporation is formed, it is granted which of the following rights?

egal powers to sue the ability to issue stock

One of the important questions in the area of investments includes the potential risks and reward associated with investing in _________ assets

financial

A partnership in which partners share in gains or losses and carry unlimited liability for all partnership debts is called a ______.

general partnership

A sole proprietorship is a business that _______.

is owned by one person

A corporation is a distinct ______ entity and as such can have a name and take advantage of the legal powers of natural persons.

legal

A limited liability company's owners have ______ liability.

limited

Businesses are motivated to organize as corporations because stockholders in a corporation have ______ liability for corporate debts.

limited

Corporations in other countries are often called:

limited liability companies joint stock companies public limited companies

What type of partnership involves both general and limited partners to run the business?

limited partnership

In a limited partnership, a limited partner's liability for business debts is ______.

limited to their cash contribution to the partnership

The goal of a "for-profit" business is to ______ the value of shareholders' wealth.

maximize

A business without separate legal authority formed by two or more people is known as a ______.

partnership

A limited liability company is taxed like a ______, but retains ______ for owners.

partnership; limited liability

Which one of these is an important mechanism used by unhappy stockholders to replace current management?

proxy fight

The owners of a corporation are called ______.

shareholders

How is ownership of a corporation represented?

shares of stock

A(n) ______ is someone other than an owner or a creditor who potentially has a claim on the cash flows of the firm.

stakeholder

Who elects the board of directors and ultimately maintains control of the firm?

stockholders

Which of the following are considered non-owner stakeholders in a company?

suppliers employees government

Which of the following are reasons that the corporation is the most important form of business?

Corporations can enter contracts. Corporations are separate legal entities. Corporations can sue and be sued.

When are corporate profits taxed?

Corporations pay taxes on corporate profits. Individuals pay taxes on corporate dividends.

How is ownership transferred in a corporation?

Ownership is transferred by gifting or selling shares of stock.

Which of the following are defining features of the primary market?

Proceeds from the sale of securities go to the issuing firm. It is the market where initial public offerings are made.

The relationship between stockholders and management can best be described as a(n) ______ relationship.

agency