FINN Chapter 1
The federal government taxes which of the following?
Corporate earnings and shareholder dividends
A partnership in which partners share in gains or losses, and carry unlimited liability for all partnership debts, is called a:
General Partnership
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.
A corporation receives cash from financial markets by selling ______ and ______.
Stocks, Bonds
agency problem
The conflict of interest between an agent and a principal
What is the main goal of financial management?
To maximize current share value
A bad financial decision is defined as a decision that ______ shareholder wealth.
decreases
A sole proprietorship is a business that
is owned by one person
In a limited partnership, a limited partner's liability for business debts is
limited to their cash contribution to the partnership
A business without separate legal authority formed by two or more people is known as a _____.
partnership
A(n) ______ is someone other than an owner or a creditor who potentially has a claim on the cash flows of the firm.
stakeholder