Chapter 1 Finance

Which one of the following forms of business organization offers liability protection to some of its owners but not to all of its owners?

Limited partnership

Which one of the following is an advantage of being a limited partner?

Losses limited to capital invested

Which one of the following statements is correct?

NASDAQ has more listed stocks than does the NYSE.

A sole proprietorship:

has its profits taxed as personal income.

A limited liability company (LLC):

prefers its profits be taxed as personal income to its owners

One example of a primary market transaction would be the:

sale of 1,000 shares of newly issued stock by Alt Company to Miquel.

You contacted your stock broker this morning and placed an order to sell 300 shares of a stock that trades on the NYSE. This sale will occur in the:

secondary market.

An agency issue is most apt to develop when:

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

The primary goal of financial management is to maximize:

the market value of existing stock.

Which one of the following is most apt to align management's priorities with shareholders' interests?

Compensating managers with shares of stock that must be held for a minimum of three years

Which one of the following statements is correct?

The primary purpose of the NYSE is to match buyers with sellers.

Which one of the following statements about a limited partnership is correct?

There must be at least one general partner.

Which one of the following applies to a general partnership?

Any one of the partners can be held solely liable for all of the partnership's debt.

Which one of the following situations is most apt to create an agency conflict?

Basing management bonuses on the length of employment

One advantage of the corporate form of organization is the:

ability to raise larger sums of equity capital than other organizational forms.