Finance

Which of the following individuals have unlimited liability for a firm's debts based on their ownership interest? Both general partners and sole proprietors All stockholders Only general partners Both limited and general partners Only sole proprietors

Both general partners and sole proprietors

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

Capital budgeting

Which one of the following terms is defined as the mixture of a firm's debt and equity financing? Capital structure Working capital management Cash management Cost analysis Capital budgeting

Capital structure

Which business form is best suited to raising large amounts of capital? Limited partnership Corporation Sole proprietorship General partnership Limited liability company

Corporation

Sally and Alicia are equal general partners in a business. They are content with their current management and tax situation but are uncomfortable with their unlimited liability. Which form of business entity should they consider as a replacement to their current arrangement assuming they wish to remain the only two owners of the business? Limited liability company Sole proprietorship Corporation Joint stock company Limited partnership

Limited liability company

Sam, Alfredo, and Juan want to start a small U.S. business. Juan will fund the venture but wants to limit his liability to his initial investment and has no interest in the daily operations. Sam will contribute his full efforts on a daily basis but has limited funds to invest in the business. Alfredo will be involved as an active consultant and manager and will also contribute funds. Sam and Alfredo are willing to accept liability for the firm's debts as they feel they have nothing to lose by doing so. All three individuals will share in the firm's profits and wish to keep the initial organizational costs of the business to a minimum. Which form of business entity should these individuals adopt? Sole proprietorship Limited partnership General partnership Corporation Joint stock company

Limited partnership

Which one of the following best states the primary goal of financial management? Minimize operational costs while maximizing firm efficiency Increase cash flow and avoid financial distress Maintain steady growth while increasing current profits Maximize the current value per share Maximize current dividends per share

Maximize the current value per share

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

Payment of dividends

Which one of the following is a cash flow from a corporation into the financial markets? Borrowing of long-term debt Payment of government taxes Issuance of corporate debt Payment of loan interest Sale of common stock

Payment of loan interest

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

Proxy fight

Which one of the following is a primary market transaction? Sale of currently outstanding stock by a dealer to an individual investor Sale of a new share of stock to an individual investor Gift of stock by a shareholder to a family member Stock ownership transfer from one shareholder to another shareholder Gift of stock from one shareholder to another shareholder

Sale of a new share of stock to an individual investor

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? Secondary, OTC market Secondary, auction market Secondary, dealer market Primary, dealer market Primary, auction market

Secondary, auction market

Which one of the following parties has ultimate control of a corporation? Shareholders Board of directors Chief executive officer Chief operating officer Chairman of the board

Shareholders

Which one of the following is a working capital management decision? What type(s) of equipment is (are) needed to complete a current project? What amount of long-term debt is required to complete a project? How many shares of stock should the firm issue to fund an acquisition? Should a project should be accepted? Should the firm pay cash for a purchase or use the credit offered by the supplier?

Should the firm pay cash for a purchase or use the credit offered by the supplier?

A business created as a distinct legal entity and treated as a legal "person" is called a(n): sole proprietorship. limited partnership. unlimited liability company. general partnership. corporation.

corporation.

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

corporations.

One disadvantage of the corporate form of business ownership is the: firm's greater ability to raise capital than other forms of ownership. firm's potential for an unlimited life. double taxation of distributed profits. limited liability of its shareholders for the firm's debts. firm's ability to issue additional shares of stock.

double taxation of distributed profits.

A business formed by two or more individuals who each have unlimited liability for all of the firm's business debts is called a: limited liability company. general partnership. corporation. sole proprietorship. limited partnership.

general partnership.

Capital structure decisions include determining: how much debt should be assumed to fund a project. how to allocate investment funds to multiple projects. the amount of funds needed to finance customer purchases of a new product. how much inventory will be needed to support a project. which one of two projects to accept.

how much debt should be assumed to fund a project.

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

is taxed similar to a partnership.

A business partner whose potential financial loss in the partnership will not exceed his or her investment in that partnership is called a: limited partner. sole proprietor. corporate shareholder. general partner. zero partner.

limited partner.

Financial managers should primarily focus on the interests of: shareholders. the board of directors. stakeholders. the vice president of finance. their immediate supervisor.

shareholders.

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

sole proprietorship.

The treasurer of a corporation generally reports directly to the: president. vice president of finance. chairman of the board. board of directors. chief executive officer.

vice president of finance.

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

working capital.