HW 1 Finance 381

corporation

A business that is a legal entity separate from the owners, yet treated as a legal person, is called a(n):

sole proprietorship

A firm owned by a single person who has unlimited liability for the firm's debt is called a:

general partnership

A firm owned by two or more people who each have unlimited liability for all of the firm's debts is called a:

is personally responsible for 100 percent of the debts of the partnership.

A general partner:

capital structure

Determining the number of shares of stock to issue is an example of a ______ decision.

occurred in the secondary market.

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

shareholders.

Financial managers should primarily focus on the interests of:

Secondary, auction market

Symone sold shares of Naraghi Corporation stock to Aleena. The stock is listed on the NYSE. This trade occurred in which one of the following?

Increasing current profits when doing so lowers the value of the company's equity

Which one of the following actions by a financial manager is most apt to create an agency problem?

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

Which one of the following is a primary market transaction?

Increasing managers' base salaries

Which one of the following is least apt to help convince managers to work in the best interest of the stockholders? Assume there are no golden parachutes.

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

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

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

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