FIN 650 1-5-6-7

Agency problems are most associated with: sole proprietorships. general partnerships. limited partnerships. corporations. limited liability companies.

corporations.

Item 3 Item 3 10 points Which one of the following terms is defined as the management of a firm's long-term investments? Working capital management Financial allocation Agency cost analysis Capital budgeting Capital structure

Capital budgeting

Which one of the following represents a cash outflow from a corporation? Issuance of new securities Payment of dividends New loan proceeds Receipt of tax refund Initial sale of common stock

Payment of dividends

Which one of the following functions should be the responsibility of the controller rather than the treasurer? Depositing cash receipts Processing cost reports Analyzing equipment purchases Approving credit for a customer Paying a vendor

Processing cost reports

Which one of the following is a means by which shareholders can replace company management? Stock options Promotion Sarbanes-Oxley Act Agency play Proxy fight

Proxy fight

Shareholder A sold shares of Maplewood Cabinets stock to Shareholder B. The stock is listed on the NYSE. This trade occurred in which one of the following? Primary, dealer market Secondary, dealer market Primary, auction market Secondary, auction market Secondary, OTC market

Secondary, auction market

Which one of the following statements concerning a sole proprietorship is correct? A sole proprietorship is designed to protect the personal assets of the owner. The profits of a sole proprietorship are subject to double taxation. The owner of a sole proprietorship is personally responsible for all of the company's debts. There are very few sole proprietorships remaining in the U.S. today. A sole proprietorship is structured the same as a limited liability company.

The owner of a sole proprietorship is personally responsible for all of the company's debts.

In 1904, the first Putting Green Championship was held. The winner's prize money was $130. In 2016, the winner's check was $1,164,000. (Do not round intermediate calculations.) a. What was the percentage increase per year in the winner's check over this period? b. If the winner's prize increases at the same rate, what will it be in 2049?

a. [(1164000/130)^1/112]-1 b. 1164000 x (1 + a%)^(2049-2016)

A limited partnership: has an unlimited life. can opt to be taxed as a corporation. terminates at the death of any one limited partner. has at least one partner who has unlimited liability for all of the partnership's debts. consists solely of limited partners.

has at least one partner who has unlimited liability for all of the partnership's debts.

A general partner: is personally responsible for all partnership debts. has no say over a firm's daily operations. faces double taxation whereas a limited partner does not. has a maximum loss equal to his or her equity investment. receives a salary in lieu of a portion of the profits.

is personally responsible for all partnership debts.

A limited liability company: can only have a single owner. is comprised of limited partners only. is taxed similar to a partnership. is taxed similar to a C corporation. generates totally tax-free income.

is taxed similar to a partnership.

The Sarbanes-Oxley Act of 2002 is a governmental response to: decreasing corporate profits. the terrorist attacks on 9/11/2001. a weakening economy. deregulation of the stock exchanges. management greed and abuses.

management greed and abuses.

Rick deposited $2,800 into an account 10 years ago for an emergency fund. Today, that account is worth $3,980. What annual rate of return did Rick earn on this account assuming no other deposits and no withdrawals?

r = (3980/2800)^1/10 -1

A business owned by a solitary individual who has unlimited liability for the firm's debt is called a: corporation. sole proprietorship. general partnership. limited partnership. limited liability company.

sole proprietorship.

Corporate dividends are: tax-free because the income is taxed at the personal level when earned by the firm. tax-free because they are distributions of aftertax income. tax-free since the corporation pays tax on that income when it is earned. taxed at both the corporate and the personal level when the dividends are paid to shareholders. taxable income of the recipient even though that income was previously taxed.

taxable income of the recipient even though that income was previously taxed.

An example of a capital budgeting decision is deciding: Multiple Choice how many shares of stock to issue. whether or not to purchase a new machine for the production line. how to refinance a debt issue that is maturing. how much inventory to keep on hand. how much money should be kept in the checking account.

whether or not to purchase a new machine for the production line.

A firm's short-term assets and its short-term liabilities are referred to as the firm's: working capital. debt. investment capital. net capital. capital structure.

working capital.