MBE322
stakeholder
A ______ is someone other than an owner or a creditor who potentially has a claim of the cash flows of a firm.
proxy
A _______ is the authority to vote someone else's stock.
benefit
A _________ corporation is for profit, and has the legal attributes of accountability, transparency, and purpose.
decreases
A bad financial decision is defined as a decision that ______ owners' equity.
transparancy
A benefit corporation is for profit, and has the legal attributes of accountability, _____, and purpose.
partnership
A business without separate legal authority formed by two or more people is known as a _____.
legal
A corporation is a distinct ______ entity and as such can have a name and take advantage of the legal powers of natural persons.
stocks; bonds
A corporation receives cash from financial markets by selling ______ and ______.
It is difficult to transfer ownership. Each owner has unlimited liability for all firm debts.
A general partnership has which of the following characteristics?
Increase the value of the firm's existing stock Increase the market value of shareholders' equity
A good financial decision aims at which of the following?
partnership; limited
A limited liability company is taxed like a ______ and its owners have ____ liability.
2
A partnership must have at least _______ owners.
unlimited
A sole proprietor has ______ personal liability for all business debts and obligations.
partnership
An LLC is essentially a hybrid of ____________ and corporation.
articles of incorporation
An organization must prepare ______ and bylaws when forming a corporation.
management
Because ownership in a corporate is spread over a huge number of shareholders, it can be argued that _________________ effectively controls the firm.
residual owners
Because shareholders get paid last after all other obligations are satisfied, they are often called _____.
limited
Businesses are motivated to organize as corporations because stockholders in a corporation have _______ liability for corporate debts.
long-term investments
Capital budgeting is concerned with planning and managing a firm's _____.
personal
Corporate profits are taxed twice, first at the corporate level when they are earned and again at the ______ level when they are paid out.
joint stock companies. public limited companies.
Corporations in other countries are often called:
dark
Due to the extreme costs of SOX, hundreds of public firms have chosen to "go ________," meaning their shares are no longer traded on the major stock exchanges.
False
Finance is only important to study if you are planning a career in finance.
takeover
Firms that are poorly managed are more attractive as acquisitions. This form of threat known as a ________ motivates managers to act in the stockholders' best interests. (Enter one word per blank.)
bylaws
Forming a corporation involves preparing articles of incorporation and a set of
To increase shareholders' wealth
From the stockholders' perspective, what is the primary purpose of awarding stock options to managers?
Ownership is transferred by gifting or selling shares of stock.
How is ownership transferred in a corporation?
Agency problem
If you hire a real estate company to sell your house, you are most apt to encounter which one of the following?
general
In a _______ partnership, all the partners share in gains or losses, and all have unlimited liability for all partnership debts, not just some particular share.
Blank 1: limited Blank 2: limited
In a _______ partnership, one or more general partners will run the business and have unlimited liability, but there will be one or more ___________ partners who will not actively participate in the business.
the board of directors
In a corporation, the stockholders elect _____, who then select the managers.
financial manager
In a large corporation, the _____ would be responsible for answering the three main questions that must be asked when starting a firm.
financial aspects of operations, such as collections of accounts receivables. financing decisions. long-term investment decisions.
In a large corporation, the financial manager is primarily responsible for:
limited to his/her cash contribution to the partnership
In a limited partnership, a limited partner's liability for business debts is ______.
Managers
In a shareholder-manager relationship, who is the agent?
STEM
In addition to the importance of finance for marketing, accounting, and management careers, finance is also now considered a
equity
In financial markets, debt and _________ securities are bought and sold.
Chief Financial Officer (CFO)
In large firms, financial activity is usually associated with which top officer?
opportunities
Indirect agency costs are often due to lost ______.
part of working capital. current asset.
Inventory is a:
corporate
It is argued that, left to themselves, managers would tend to maximize the amount of resources over which they have control or, more generally, ___________ power or wealth.
false
It is sometimes argued that, left to themselves, managers tend to minimize the amount of resources over which they have control.
corporation
Joint stock company is another name for what is referred to as a ___________ in the United States.
stockholder goals
Managers who are successful in pursuing _____ will be in greater demand in the labor market and thus command higher salaries.
organized auction markets
Most equity shares of large firms in the U.S. trade on:
the New York Stock Exchange
Organized auction markets include:
management
Since ________ and ownership are separated, a corporation's life is unlimited.
management
Since ownership in a corporation can be dispersed over a huge number of stockholders, it can be argued that ______ effectively controls the firm.
dividends and debt payments
Some of the cash flow generated by a firm goes back to the financial markets in the form of ______.
residual
Stockholders are entitled to only what is left after employees, suppliers, and creditors are paid, which makes them _____ owners.
limited
Stockholders in a corporation have _____ liability for corporate debts.
Confirm the validity of the annual financial report Accept responsibility for material errors in the annual report List any deficiencies in internal controls
The Sarbanes-Oxley Act requires corporate officers to do which of the following?
bylaws
The _____ are rules describing how he corporation regulates its existence.
corporation
The _________ is the most important form, in terms of size, of business organization in the United States.
proprietorship
The advantages and disadvantages of a partnership are basically the same as those of a _____.
SOX
The aim of the act known as ______ is to protect investors from corporate abuse.
Financial accounting Tax payments
The controller is responsible for which of the following tasks?
Tax payments Financial accounting
The controller is responsible for which of the following tasks?
risk
The corporate goal involving bankruptcy avoidance, stability, and safety relate to controlling ______.
agency
The costs incurred due to a conflict of interest between stockholders and management are called ______ costs.
Corporate earnings and shareholder dividends
The federal government taxes which of the following?
the stock
The financial manager acts in the shareholders' best interests by making decisions that increase the value of _____. Multiple choice question.
investments
The five main areas of finance are corporate finance, _____, financial institutions, international finance, and fintech.
maximize
The goal of a for-profit business is to Blank______ existing owners' equity.
owner's
The goal of the for-profit business is to maximize ________ equity.
The amount the shareholder invested in the corporation
The liability of a shareholder in a corporation is limited to which of these?
unlimited
The life of a corporation ______.
direct
The need to monitor management actions is an example of a(n) ________ (direct/indirect) agency cost.
controller
The officer responsible for corporate tax reporting is the ______.
Treasurer
The officer responsible for managing the firm's cash flows is the ______.
stockholders
The owners of a corporation are called ______.
would probably be the most commonly cited goal for a business. can be achieved by cost-cutting.
The possible goal of profit maximization:
the existing shares of stock.
The primary responsibility of financial managers is to increase the value of:
agency
The relationship between stockholders and management can best be described as a(n) ______ relationship.
raising cash
The relative ease of transferring ownership, the limited liability for business debts, and the unlimited life of the business are why the corporate form is superior to sole proprietorships or partnerships for _____.
bylaws
The rules used by a corporation to regulate its existence are known as _________.
agency
The term _________ costs refers to the costs of the conflict of interest between stockholders and management.
true
True or false: Cash flows to the firm from the financial markets.
False
True or false: Ownership in the corporate form is difficult to transfer.
false
True or false: The Sarbanes-Oxley Act provides incentives for companies to go public in US markets.
true
Under SOX, corporate officers must explicitly declare that the annual report does not contain any false statements or material omissions.
Earning or increasing profits Controlling risk
What are the two basic classifications under which most potential financial goals fall?
How closely management goals align with stockholder goals and the way managers are compensated
What are the two factors that impact whether managers will act in the best interest of stockholders?
To maximize current value per share of existing stock
What is the main goal of financial management?
Legal powers to sue The ability to issue stock State citizenship for jurisdictional purposes
When a corporation is formed, it is granted which of the following rights?
primary market
When a corporation raises funds in the financial markets, the transaction occurs on the _____.
secondary
When one owner of a security sells the security to another person, the transaction takes place in the _________ market
Controller
Which corporate officer is responsible for accurate financial reporting of the firm's activities?
Where will long-term financing be obtained to pay for investments? How will everyday financial activities be handled? What long-term investments should be made?
Which of the following are among the most important questions to be asked when a business is started?
Employees Government Suppliers
Which of the following are considered stakeholders in a company?
Taxation of partnership income Fund raising limitations Personal liability for firm debts
Which of the following are important when considering a partnership?
Equity Long-term debt
Which of the following are included in a firm's capital structure?
It is the simplest type of business to form. A proprietorship has a limited life.
Which of the following are true of a sole proprietorship?
Handling cash flows Making financial plans Managing capital expenditure decisions
Which of the following are typically included in a treasurer's responsibilities?
Managing capital expenditure decisions Handling cash flows Making financial plans
Which of the following are typically included in a treasurer's responsibilities?
Managerial compensation tied to performance Better prospects of promotion
Which of the following can be used to encourage managers to act in the best interests of shareholders?
WorldCom Enron Tyco
Which of the following companies were involved in corporate scandals that led to Sarbanes-Oxley?
Accounts payable Current (short-term) assets Accounts receivable
Which of the following is included in working capital?
Which type of operating system should you use for your computers?
Which of the following is not an important question that must be asked when starting a firm? What long-term investments should you take on? Which type of operating system should you use for your computers? How will you manage your everyday financial activities? Where will you get the long-term financing to pay for your investment?
Controller Treasurer
Which of the following positions generally report to the chief financial officer (CFO)?
Corporations can enter into contracts. Corporations can sue and be sued. A corporation is a separate legal entity with the ability to acquire and exchange property.
Which of the following show why a corporation is the most important form of business?
Maximize profits Survival Minimize costs
Which of the following, according to the textbook, are possible financial goals for a company?
Shareholders
Which one of the following parties would be the last party to receive payment if a firm were to close? Assume all parties have a legitimate claim on the firm's assets.
proxy fight
Which one of these is an important mechanism used by unhappy stockholders to replace current management?
Threat of a hostile takeover
Which one of these motivates managers to make good decisions?
promotions
Which one of these provides a manager an incentive to perform well?
Capital structure
Which term applies to the mixture of debt and equity maintained by a firm?
Stock options
______ are frequently used to encourage key managers to maximize the value of the firm's stock.
stock options
______ are frequently used to encourage key managers to maximize the value of the firm's stock.
Capital
______ budgeting is the process of making and managing expenditures on long-term assets.
SOX
______ is to protect investors from corporate abuse.