Chapter 1 Smartbook Questions - Finance

The stockholder of a corporation has Blank______ liability for the business debts and obligations. Multiple choice question. limited unlimited no

limited

A corporation relies on ________ markets to provide funds for short-term operations and for new plant and equipment.

money

Markets dealing with short-term securities are referred to as ________markets.

money

Money is considered to have a time value because: Multiple choice question. all currency has a date of manufacture printed on it money has more value in your possession today than at a later point in the future inflation makes money worth more in the future than it is today checks are only valid for a certain period of time

money has more value in your possession today than at a later point in the future

The five-member board established by the Sarbanes-Oxley Act was given the responsibility for Multiple select question. providing auditor independence controlling the quality of audits providing management with accurate reports establishing auditing standards

providing auditor independence controlling the quality of audits establishing auditing standards

The Dodd-Frank Act was passed by congress in response to: Multiple choice question. Economic crisis Financial crisis Environmental crisis Political crisis

Financial crisis

For what do corporations rely on financial markets to provide? Multiple choice question. Product advice Insider information The latest news Funding

Funding

An advantage of a sole proprietorship Multiple choice question. Low organizational and operating costs Easy divisibility of ownership interest by issuing shares of stock Ability to share possible losses Limited liability

Low organizational and operating costs

True or False Question Institutional investors are influential because of their ability to replace poorly performing boards of directors.

True

True or False Question The term financial management can be used interchangeably with corporate finance.

True

True or False Question Today's dollar value is referred to as the present value. True False

True

True or false: Articles of incorporation specify the rights and limitation of the entity.

True

True/False Institutional investors are influential because of their ability to replace poorly performing boards of directors.

True

True/False The term financial management can be used interchangeably with corporate finance.

True

Money markets deal with securities that Multiple choice question. have a life of one year or more have a life of one year or less have a perpetual life are long-term

have a life of one year or less

Capital markets deal with securities that Multiple choice question. have a life of one year or less are short-term have a life of 90 days have a life of one year or more

have a life of one year or more

Multiple Choice Question Blank______ occurs when someone has information that is not available to the public and then uses this information to profit from trading in a company's publicly traded securities. Multiple choice question. ethical behavior social responsibility legal activities illegal insider trading

illegal insider trading

______ occurs when someone has information that is not available to the public and then uses this information to profit from trading in a company's publicly traded securities. Multiple choice question. legal activities social responsibility illegal insider trading ethical behavior

illegal insider trading

The purpose of the Dodd-Frank Act is to Blank______. Multiple choice question. create the PCAOB toughen penalties for corporate fraud restrict the type of consulting CPAs may perform improve accountability and transparency in the financial system

improve accountability and transparency in the financial system

True/False Financial markets exist as a small, local network of individuals and financial institutions.

False

The Sarbanes-Oxley Act was by congress in which year? Multiple choice question. 2002 2009 1991 2007

2002

Money market securities include all of the following except: Multiple select question. bonds common stocks certificates of deposit with maturities of less than one year commercial paper

bonds common stocks

Markets where securities have a life of more than one year are referred to as _______ markets.

capital

The five-member board established by the Sarbanes-Oxley Act was given the responsibility for Multiple select question. providing management with accurate reports controlling the quality of audits providing auditor independence establishing auditing standards

controlling the quality of audits providing auditor independence establishing auditing standards

Which of the following is true of a sole proprietorship? Multiple choice question. Operating costs are higher than with other forms of businesses Organizational costs are higher than with other forms of businesses The owner enjoys limited liability Profits or losses are taxed at the owner's personal tax rate

Profits or losses are taxed at the owner's personal tax rate

Which of the following is true of a partnership? Multiple select question. Unlimited liability There are 2 or more owners Shares are traded in the secondary financial markets They have double taxation

Unlimited liability There are 2 or more owners

Which of the following is true of a partnership? Multiple select question. Unlimited liability They have double taxation Shares are traded in the secondary financial markets There are 2 or more owners

Unlimited liability There are 2 or more owners

Directors serve in a ________ capacity for the shareholders and may be liable for the mismanagement of the firm.

fiduciary

The major focus of the Sarbanes-Oxley Act is to ensure the accuracy of the Multiple choice question. corporations policies corporations stock prices financial statements corporations valuation

financial statements

Accounting provides financial data through the Multiple choice question. statement of cash flows, income statement, and general journal income statement, balance sheet, and general ledger income statement, balance sheet, and general journal income statement, balance sheet, and statement of cash flows

income statement, balance sheet, and statement of cash flows

The finance field is often divided into two general subcategories, _________ and _________ finance.

investments, corporate

Finance generally Blank______.

is forward-looking

A corporation has a continual life which means that it is not dependent upon any one shareholder for maintaining its Multiple choice question. divisibility profitability debt structure legal existence

legal existence

The more frequent daily activities of financial management include: Multiple select question. establishment of dividend plans establishment of capital budgeting sale of stocks and bonds receipt and disbursement of funds inventory control credit management

receipt and disbursement of funds inventory control credit management

Since institutional investors own a large percentage of shares in many corporations they may have the ability to vote large blocks of shares in order to: Multiple choice question. install a new accounting system replace some or all of the board of directors detect fraud in their accounting audits. take legal action against the board of directors

replace some or all of the board of directors

The focus of modern financial management is on: Multiple choice question. the impact of the Internet and the rapid development of computer technology inflation and safeguarding assets maximization of return risk-return relationships and the maximization of return for a given level of risk

risk-return relationships and the maximization of return for a given level of risk

Participants in public financial markets include: Multiple select question. state governments national governments corporations local governments

state governments national governments local governments

The primary organizational forms include: the co-operative the X-corporation the corporation the partnership the sole proprietorship

the corporation the partnership the sole proprietorship

Management of shareholders' interests is ultimately the responsibility of Multiple choice question. the corporate shareholders the corporate bondholders the corporation's management team the corporation's board of directors

the corporation's board of directors

A financial manager's functions must be carried out while also balancing: Multiple choice question. the HR functions of the business stocks, bonds, and retained earnings the marketing functions of the business the profitability and risk components of the firm

the profitability and risk components of the firm

The primary organizational forms include: Multiple select question. the X-corporation the sole proprietorship the partnership the co-operative the corporation

the sole proprietorship the partnership the corporation

True or False Question True or false: Articles of incorporation specify the rights and limitation of the entity

true

True or false: Capital markets foster the efficient allocation of resources.

true

The financial manager should attempt to maximize the wealth of the firm's shareholders through achieving the highest possible Blank______ for the firm. Multiple choice question. value risk profit short-term wealth

value