FINC Exam 1
What company is a robo-advisor that uses the advances in artificial intelligence to provide computer based investment advice.
Wealthfront
How are "C" Corporations taxed?
twice. Shareholders are taxed separate from the entity.
U.S. public companies are required to file their annual financial statements with the U.S. Securities and Exchange Commission on which form?
10-K
Explain the Rule of 72.
72 / interest rate = years it takes to double. @ 9% - 72/9 = 8 years to double money
Can a firm with positive net income run out of cash? Explain.
A firm can have positive net income but still run out of cash. For example, to expand its current production, a profitable company may spend more on investment activities than it generates from operating activities and financing activities. Net cash flow for that period would be negative, although its net income is positive. It could also run out of cash if it spends a lot on financing activities, perhaps by paying off maturing long-term debt, repurchasing shares, or paying dividends.
What company is a robo-advisor with a twist. They link to customer purchases and automatically invest their money based on a rule such as "taking the change." They combine both the artificial intelligence technology of how to incest with the communications technology of being able to implement rules like invest the change from every purchase.
Acorns
If you buy shares of Coca-Cola on the primary market:
Coca-Cola receives the money because the company has issued new shares.
Which organization forms give their owners limited liability?
Corporations and limited liability companies give owners limited liability. Limited Partnerships provide limited liability for the limited partners, buy not for the general partners.
"Off-Balance Sheet" transactions are required to be disclosed:
in the management discussion and analysis.
Which of the following statements is most correct? -An advantage of a corporation is that it is subject to double taxation. -Corporations face more regulations when compared to partnerships. -An advantage to incorporation is that it allows for less regulation of the business. -Unlike a partnership, a disadvantage of a corporation is that it has limited liability.
Corporations face more regulations when compared to partnerships
How are S corporations taxed?
Do not pay any income tax. Therefore they are only taxed when shares are exchanged.
How do you calculate Book Value?
Gross Value - Accumulated Depreciation. On HW we did NOT subtract depreciation expense for the current year.
Where are a firm's revenues and expenses over a period of time reported?
Income Statement or Statement of Financial Performance
What is deducted from EBIT to determine net income?
Interest Expense and Corporate Taxes
if Moon Corporation's gross margin declined, which of the following is true?
Its sales Increased. Its cost of goods sold increased. Its cost of goods sold as a percent of sales increased. **** Its net profit margin was unaffected.
What company is an alternative loan platform that links consumers to individual lenders using their online platform?
LendingTree
What company is a car insurer that allows consumers to pay by the number of miles they drive. The data on how much its customers are driving is collected automatically by the car and transmitted to the company?
Metromile
The largest stock market in the world by volume is:
NASDAQ
The Dodd-Frank Wall Street and Consumer Protection Act does the following:
Requires the SEC to study ways to reduce the cost of SOX for firms with less than $250m in publicly traded shares. Exempts firms with less than $75m in publicly traded shares from some provisions of SOX. Strengthens whistle-blower provisions of SOX.
What category of firms accounts for the greatest number of firms?
Sole Proprietorship
The person charged with running the corporation by instituting the rules and policies set by the board of directors is called:
The Chief Executive Officer
By evaluating cost and benefits using competitive market prices, we can determine whether a decision will make the firm and its investors wealthier. This central concept is called:
The Valuation Principle
Do corporate decisions that increase the value of the firm's equity benefit society as a whole?
Yes, as long as the increase in the value of the firm's equity does not come at the expense of others.
A sole proprietorship is owned by:
one person
A firm's equity multiplier measures:
the value of assets held per dollar of shareholder equity.