Business Finance Ch1

Financial, investment

Growth can summarize various aspects of a firm's __________ and ___________ policies. A. Legal, expansion B. Marketing, investment C. Profitability, expansion D. Financial, investment E. Goals, marketing

C. the control of a firm is separated from the firm's ownership.

An agency issue is most apt to develop when: A. a firm encounters a period of stagnant growth. B. a firm downsizes. C. the control of a firm is separated from the firm's ownership. D. the firm's owner is also its key manager. E. a firm is structured as a general partnership.

B. has a physical trading floor

An auction market: A. is an electronic means of exchanging securities. B. has a physical trading floor. C. handles primary market transactions exclusively. D. is also referred to as an OTC market. E. is dealer-based.

E. Stakeholders

An employee has a claim on the cash flows of Martin's Machines. This claim is defined as a claim by one of the firm's: A. residual owners. B. shareholders. C. financiers. D. provisional partners. E. stakeholders.

B. Corporation

Matt and Alicia created a firm that is a separate legal entity and will share ownership of that firm on a 75/25 basis. Which type of entity did they create if they have no personal liability for the firm's debts? A. Limited partnership B. Corporation C. Sole proprietorship D. General partnership E. Public company

D. has its profits taxed as personal income.

A sole proprietorship: A. provides limited financial liability for its owner. B. involves significant legal costs during the formation process. C. has an unlimited life. D. has its profits taxed as personal income. E. can generally raise significant capital from non-owner sources.

C. the total debts of the partnership, even if he or she was unaware of those debts.

In a general partnership, each partner is personally liable for: A. only the partnership debts that he or she personally created. B. his or her proportionate share of all partnership debts regardless of which partner incurred that debt. C. the total debts of the partnership, even if he or she was unaware of those debts. D. the debts of the partnership up to the amount he or she invested in the firm. E. all personal and partnership debts incurred by any partner, even if he or she was unaware of those debts.

A. International Finance

Jamie is employed as a currency trader in the Japanese yen market. Her job falls into which one of the following areas of finance? A. International finance B. Financial institutions C. Corporate finance D. Capital management E. Personal finance

True

To generate a coherent plan, goals and objectives will have to be modified, and priorities will have to be established. True or False

B. The project horizon for the next 30 to 90 days

When evaluating financial planning steps, we must consider all of the following, except: A. The planning horizon for the next 2 to 5 years. B. The project horizon for the next 30 to 90 days. C. How all small projects are added up for one big project. D. Identifying the total need investment for the plan.

D. Cash management

Which one of the following functions should be assigned to the corporate treasurer rather than to the controller? A. Data processing B. Cost accounting C. Tax management D. Cash management E. Financial accounting

C. Losses limited to capital invested

Which one of the following is an advantage of being a limited partner? A.Nontaxable share of any profits B. Control over the daily operations of the firm C. Losses limited to capital invested D. Unlimited profits without risk of incurring a loss E. Active market for ownership interest

C. Chief financial officer

Which one of the following occupations best fits into the corporate area of finance? A. Mortgage broker B. Treasury bill analyst C. Chief financial officer D. Insurance risk manager E. Local bank manager

E. All over-the-counter sales occur in dealer markets.

Which one of the following statements is correct? A. All secondary markets are dealer markets. B. All secondary markets are broker markets. C. All stock trades between existing shareholders are primary market transactions. D. All stock transactions are secondary market transactions. E. All over-the-counter sales occur in dealer markets.

A. NASDAQ has more listed stocks than does the NYSE.

Which one of the following statements is correct? A. NASDAQ has more listed stocks than does the NYSE. B. The NYSE is a dealer market. C. NASDAQ is an auction market. D. NASDAQ has the most stringent listing requirements of any U.S. exchange. E. The trading floor for NASDAQ is located in Chicago.