FIN350 CHAPTER 1
Margie opened a used bookstore and is both the 100 percent owner and the store's manager. Which type of business entity does Margie own if she is personally liable for all the store's debts?
Sole proprietorship
Which one of the following statements is correct?
The primary purpose of the NYSE is to match buyers with sellers
Security dealers
buy and sell from their own inventory
Jenna has been promoted and is now in charge of all external financing. In other words, she is in charge of:
capital structure management.
Uptown Markets is financed with 45 percent debt and 55 percent equity. This mixture of debt and equity is referred to as the firm's:
capital structure.
The Sarbanes-Oxley Act of 2002 has:
essentially made officers of publicly traded firms personally responsible for the firm's financial statements.
An auction market:
has a physical trading floor
The Sarbanes-Oxley Act:
require the corporate officers to personally attest that the financial statements are a fair representation of the company's financial results.
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.
In a general partnership, each partner is personally liable for:
the total debts of the partnership, even if he or she was unaware of those debts.
The potential conflict of interest between a firm's owners and its managers is referred to as which type of conflict?
Agency
Which one of the following statements is correct?
All over-the-counter sales occur in dealer markets
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?
Corporation
Capital budgeting includes the evaluation of which of the following?
Size, timing, and risk of future cash flows
Will and Bill both enjoy sunshine, water, and surfboards. Thus, the two friends decided to create a business together renting surfboards, paddle boats, and inflatable devices in California. Will and Bill will equally share in the decision making and in the business profits or losses. Which type of business did they create if they both have full personal liability for the firm's debts?
General partnership
Which one of the following is a working capital decision?
How much cash should the firm keep in reserve?
Which one of the following is an advantage of being a limited partner?
Losses limited to capital invested
