Ch1

The following graph shows a stock's actual market price and intrinsic value over time. The intrinsic value comes from another research analyst. Use the dropdown menus to label the periods in which the stock was undervalued or overvalued. A) Actual Stock Price < Intrinsic Price B) Actual Stock Price > Intrinsic Price

A) Undervalued B) Overvalued

Corporate finance is concerned with the different aspects of a business's financial management. The chief financial officer (CFO) is the top financial position in the organization and oversees several tasks. The CFO is not responsible for which of the following departments? Check all that apply. Research and development Administration Legal issues Marketing Capital budgeting

Research and development Administration Marketing

If the stock price of Krit Corp. decreases in the next two years, Wilson's wealth in Krit Corp. will _________.

decrease

The Sarbanes-Oxley Act, passed by Congress in 2002, requires CEOs and CFOs to certify that the firm's: balance sheet includes forecasted information financial statements are audited financial statements are accurate financial statements are unbiased toward analyst expectations

financial statements are accurate

The goal of the managers of a publicly owned company should be to maximize the firm's ___________.

intrinsic value

An analyst with a leading investment bank tracks the stock of Mandalays Inc. According to her estimations, the value of Mandalays Inc.'s stock should be $115.24 per share, but Mandalays Inc.'s stock is trading at $89.57 per share on the New York Stock Exchange (NYSE). Considering the analyst's expectations, the stock is currently: overvalued in equilibrium undervalued

undervalued

Krit Corp. is a US manufacturing company based in the Midwest. As an investor, Wilson bought 175 shares of stock in Krit Corp. The stock price of Krit Corp. is currently trading at $45.00 per share. Wilson's total wealth in Krit Corp. is: $388.89 $32,250.00 $8,795.00

$7,875.00

A) Jacob founded and operated a wedding planning agency, which specialized in celebrity weddings. When he died, his business was dissolved because there was no plan for control after his death. B) Wilson started a business, based in a different state, with his uncle. Due to the business's underperformance, they had to close the business. Wilson, however, ended up losing his house due to a litigation claim. C) DDX Co. is a shipping company. David owned 1,000 shares of DDX stock. He found better opportunities and sold his entire stake in DDX to another investor. D) Selena and Mario run a law firm in Chicago. The firm has debt of $100,000, but Selena and Mario will not be held personally liable for the law firm's debt.

A) Sole Proprietorship B) Partnership C) Corporation D) LLP/LLC

Businesses can be classified into the following forms: sole proprietorship, partnership, corporation, limited liability company (LLC), and limited liability partnership (LLP). Different forms of businesses have different characteristics. Which of the following characteristics would apply to a limited liability company and a limited liability partnership? Check all that apply. Have corporate ownership structure Owners have limited liability and right to vote LLPs are not suitable for professional firms such as accounting, law, and architecture Limited financial liability Owned by single individual Taxed as a partnership

Have corporate ownership structure Owners have limited liability and right to vote Limited financial liability Taxed as a partnership