F255 Chapter 1 practice questions

Which of the following parties are not considered stakeholders of a firm?

Competitors

Which form of business would be the best choice if it were necessary to raise large amounts of capital?

Corporation

Agency problems are most likely to be associated with:

Corporations

Which one of the following is a disadvantage of the corporate form of business?

Distributed profits may experience double taxation.

Which one of the following questions involves a capital structure decision?

How much debt should the firm incur to fund a project?

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

How much inventory should the company keep on hand?

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

Maximize the current value per share

Which one of the following is a primary market transaction?

Sale of a new share of stock from a corporation to an individual investor

Ultimately, the ______ control(s) the corporation.

Shareholders

Which one of the following questions involves a capital budgeting decision?

Should the firm purchase a new machine for the production line?

A firm's mixture of debt and equity financing is the result of its ______ decisions.

capital structure

Decisions made by financial managers should primarily focus on increasing the:

market value per share of outstanding stock.

Eduardo sold 500 shares of Northcutt Corporation stock on the New York Stock Exchange. This transaction:

occurred in the secondary market.

A sole proprietorship:

requires the owner to be personally responsible for all of the company's debts.