Tewari quiz 1

Which one of the following is an agency cost?

Hiring outside accountants to audit the company's financial statements.

Which one of the following questions is least likely to be addressed by financial managers?

How should a product be marketed?

Which one of the following is least apt to help convince managers to work in the best interest of the stockholders?

Increasing managers' base salaries

Sally and Alicia currently are general partners in a business located in Atlanta, Georgia. They are content with their current tax situation but are both very uncomfortable with the unlimited liability to which they are each subjected. Which form of business entity should they consider to replace their general partnership assuming they wish to remain the only two owners of their business? Whichever organization they select, they wish to be treated equally.

LLC

Which one of the following best states the primary goal of financial management?

Maximize the stock price.

Shareholder A sold shares of Maplewood Cabinets stock to Shareholder B. The stock is registered on the NASDAQ. This trade occurred in which one of the following?

Secondary, dealer market

Which one of the following parties has ultimate control of a corporation?

Shareholders

corporate dividends are

Taxable as personal income when received by shareholders even though that income was taxed at the corporate level.

Main role of an underwriter in an IPO is to,

buy the shares from the firm at the IPO price and sell it to investors at the IPO price and earn a commission.

An example of a capital budgeting decision is deciding:

whether or not to purchase a new machine for the production line.