fin3010 quiz compilation

What is the chief disadvantage of the sole proprietorship as a form of business organization when compared to the corporate form?

Owners have unlimited liability.

you have $1500 to invest. you have 2 choices; savings account A, which earns 8.75 percent compounded annually or savings account B, which earns 8.50 compounded monthly. Which would you choose/ why

account b because it has a higher effective annual rate

when a firm decides to issue stock to raise funds, the company is making a(n) ___ decision

capital structure

in order to compare different investment opportunities (each with the same risk) with the interest rates reported in different manners you should

convert each interest rate to an effective annual rate

The primary goal of corporate financial management is to maximize the:

current value per share of the existing stock.

Which of the following is (are) considered a benefit of the corporate form of organization? I. ease of the transfer of ownership II. corporation's limited life III. double taxation

ease of the transfer of ownership

What is sales revenue, minus cost of goods sold and operating expenses, known as for income statement purposes?

ebit

The dividend payments are tax-deductible.

false

The goal of the firm should be the maximization of profit.

false

in almost all present and future value computations, it is implicitly assumed that the cash flows occur at the beg. of each period

false

sole proprietorship

has its profits taxed as personal income

The capital structure of a firm refers to the firm's

long-term debt and equity.

Which one of the following provides you with the greatest control over a firm's daily operations?

sole proprietor

The goal of profit maximization ignores the timing of profit.

true

an example of annuity is a stream of payments of $4,000 each at the end of every year of 20 years

true

if interest is compounded annually, the effective annual rate and annual percentage rate will be the same

true

Short-term assets and liabilities are referred to as the firm's

working capital.