MGMT 304 Exam 1

Which one of the following best illustrates that the management of a firm is adhering to the goal of financial management?

An increase in the market value per share

Which one of the following terms is defined as the management of a firm's long-term investments?

Capital budgeting

Which one of the following represents a cash outflow from a corporation?

Payment of dividends

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

Payment of loan interest

The decision to issue additional shares of stock is an example of:

a capital structure decision.

A business created as a distinct legal entity and treated as a legal "person" is called a(n):

corporation.

One disadvantage of the corporate form of business ownership is the:

double taxation of distributed profits.

The primary advantage of being a limited partner is:

the partner's maximum loss is limited to their capital investment.

When evaluating the timing of a project's projected cash flows, a financial manager is analyzing:

when each cash flow is expected to occur.

A firm's short-term assets and its short-term liabilities are referred to as the firm's:

working capital.

Which one of the following is an agency cost?

Hiring outside accountants to audit the company's financial statements

Which one of the following is a primary market transaction?

Sale of a new share of stock to an individual investor

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

best represent the interests of the current shareholders.

A business formed by two or more individuals who each have unlimited liability for all of the firm's business debts is called a:

general partnership.

capital structure decisions include determining:

how much debt should be assumed to fund a project.

The growth of both sole proprietorships and partnerships is frequently limited by the firm's:

inability to raise cash.

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.

A business owned by a solitary individual who has unlimited liability for the firm's debt is called a:

sole proprietorship.

Working capital management decisions include determining:

the minimum level of cash to be kept in a checking account.