Finance 303 ch. 1

One advantage of the corporate form of organization is the

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

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 applies to a general partnership?

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

Probably the least effective means of aligning management goals with shareholder interests is

automatically increasing management salaries on an annual basis.

When conducting a financial analysis of a firm, financial analysts

frequently use accounting information.

Corporate shareholders

have the ability to change the corporation's bylaws.

A corporation

is a legal entity separate from its owners.

The primary goal of financial management is most associated with increasing the

market value of the firm.

The issuer of a security must be involved in all _____ transactions involving that security

primary market

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

Which one of the following parties can sell shares of ABC stock in the primary market?

ABC company

What is the primary goal of financial management for a sole proprietorship?

Maximize the market value of the equity

Which one of the following statements correctly applies to a sole proprietorship?

Obtaining additional equity is dependent on the owner's personal finances

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 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

The Sarbanes-Oxley Act in 2002 was primarily prompted by which one of the following from the 1990s?

Corporate accounting and financial fraud

Which one of the following is a capital structure decision?

Establishing the preferred debt-equity level

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 best describes the primary intent of the Sarbanes-Oxley Act of 2002?

Increase the protections against corporate fraud

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

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.

Capital budgeting includes the evaluation of which of the following?

Size, timing, and risk of future cash flows

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

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.

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 daily financial operations of a firm are primarily controlled by managing the

working capital

Theo's BBQ has $48,000 in current assets and $39,000 in current liabilities. Decisions related to these accounts as referred to as

working capital management