Finance 2

Which of the following actions would be considered an agency problem?

A shareholder in a corporation sells shares of the company's stock when the price rises

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

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

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

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

Marissa and Raj are equal general partners in a business. They are content with their current management and tax situation but are uncomfortable with the idea of unlimited liability. If they wish to remain as the only two owners of the business, which form of business entity should they consider to replace their current arrangement?

Limited liability company

Which one of the following is a cash flow from a corporation into the financial markets?

Payment of loan interest

The controller, rather than the treasurer, is typically responsible for which one of the following functions?

Processing cost reports

Public offerings of debt and equity must be registered with the:

Securities and Exchange Commission.

Which one of the following statements is correct concerning the NYSE?

The listing requirements for the NYSE are more stringent than those of Nasdaq.

Limited partners benefit from which of the primary advantages?

Their maximum loss cannot exceed the amount of their capital investment.

Which one of the following involves a working capital management decision?

What is the maximum level of cash to be kept in the firm's bank account?

Shareholders can replace company management by implementing:

a proxy fight.

Financial managers should strive to maximize the current value per share of the existing stock to:

best represent the interests of the current owners of the firm.

A firm's mixture of debt and equity financing is the result of its ______ decisions.

capital structure

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

capital structure

Usually, the treasurer of a corporation reports directly to the:

chief executive officer.

Agency problems are most likely to be associated with:

corporations.

The articles of incorporation:

describe the purpose of the firm and set forth the number of shares of stock that can be issued.

Corporate bylaws:

determine how a corporation regulates itself.

A partner in a firm knows that the maximum financial loss he or she will experience is the amount he or she invested in the firm. The partner is called a ______ partner.

limited

The Sarbanes-Oxley Act of 2002 is a governmental response to:

management greed and abuses.

A partnership with four general partners:

must distribute 25 percent of the profits to each partner.

proprietorship

requires the owner to be personally responsible for all of the company's debts.

Financial managers should primarily focus on the interests of:

shareholders.

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

sole proprietorship.

In a typical corporate organizational structure:

the controller reports to the chief financial officer.