FIN 3403-101

The officer responsible for managing the firm's cash flow is the

- Treasurer

A corporation receives cash from financial markets by selling ________ and ________.

- bonds - stocks

Which of the following is included in working capital? - long-term debt - current (short-term debt) - accounts receivable - retained earnings - accounts payable

- current (short-term) debt - accounts receivable - accounts payable

A good financial decision aims at which of the following? - increase the cost of capital - increase the value of the firm's existing stock - increase current dividends per share - increase market value of shareholders' equity

- increase the value of the shareholders' equity - increase the value of the firm's existing stock

A sole proprietorship is a business that_______.

- is owned by one person

Which of the following can be used to encourage managers to act in the best interest of shareholders? - a large organization and more employees - managerial compensation tied to performance - executive perks - better prospects of promotion

- managerial compensation tied to performance - better prospects of promotion

Which of the following, according to the textbook, are possible financial goals for a company? - maximize profits - minimize costs - survival - incur bankruptcy

- maximize profits - minimize costs - survival

If you hire a real-estate company to sell your house, you are most apt to encounter which of the following? - agency problem - capital structure problem - Securities Exchange Act if 1934 violation - Securities Act of 1933 violation

Agency problem

Which corporate officer is responsible for accurate financial reporting of the firm's activities?

Controller

Capital budgeting is concerned with making and managing expenditures on

Long-term investments

How is ownership transferred in a corporation?

Ownership is transferred by gifting or selling shares of stock.

The costs incurred due to a conflict of interest between stockholders and management are called _____.

agency costs

Which term applies to the mixture of debt and equity maintained by a firm?

capital structure

A business without separate legal authority formed by two or more people is known as______.

partnership

Organized auction markets include:

the New York Stock Exchange (NYSE)

The Sarbanes-Oxley Act requires corporate offices to do which of the following? - accept responsibility for material errors in the annual reports - list any deficiencies in the internal reports - confirm the validity of the annual financial report - limit their compensation and stock options

- accept responsibility for material errors in the annual reports - confirm the validity of the annual financial report

Because shareholders get paid last after all other obligations are satisfied, they are often called:

- residual owners

When a corporation is formed, it is granted which of the following? - corporate life up to 100 years - state citizenship for jurisdiction purposes - the ability to issue stock - legal powers to sue

- state citizenship for jurisdiction purposes - the ability to issue stock - legal powers to sue

Which of the follow are considered stakeholders in a company? - suppliers - government - competitor - employees

- suppliers - government - employees

Which one of these motivates managers to make good decisions? - threat of hostile takeover - complacent shareholders - complacent board of directors - lack of interface with government authorities

- threat of hostile take over

In a large corporation, the financial manager is primarily responsible for...

-Long-term investment decisions -Financial aspects of operations, such as collections of accounts receivables -Financing decisions

Which of the following positions generally report to the chief financial officer (CFO)?

-Treasurer -Controller

True or False: It is sometimes argued that, left to themselves, managers tend to minimize the amount of resources over which they have control.

False

True or false: Shareholders are the ONLY stakeholder in a firm as they are the owners.

False

_____ are frequently used to encourage key managers to maximize the value of the firms stock.

Stock options

The owners of a corporation are called______.

Stockholders

What is the main goal of financial management?

To maximize current value per share of existing stock.

The need to monitor management activities is an example of a _______ (direct/indirect) agency cost.

direct

In financial markets, debt and _________ securities are bought and sold.

equity

A sole proprietorship has _____ personal liability for all business debts and obligations.

unlimited

The life of a corporation_____.

unlimited

The goal of a for-profit business is to______ existing owners' equity.

maximize

When a corporation raises funds in the financial markets, the transaction occurs on the:

primary market

Which one of these provides a manager an incentive to perform well? - lack of takeover threats - low pay - agency problems - promotions

promotions

Which of these is an important mechanism used by unhappy stockholders to replace current management? - prospectus - perpetual debt - ponzi scheme - proxy fight

proxy fight

When one owner of a security sells the security to another person, the transaction takes place in the

secondary