CH 1 HW

Which of the following parties are not considered stakeholders of a firm?

Competitors

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 involves a capital structure decision?

How much debt should the firm incur to fund a project?

Which one of the following questions is a working capital management decision?

How much inventory should the company keep on hand?

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

In which region of the country should a new product be launched?

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

Maximize the current value per share

Shareholders can replace company management by implementing:

a proxy fight.

Corporate dividends represent:

aftertax income from the corporation which becomes taxable income for the recipient.

A business that is a legal entity separate from the owners, yet treated as a legal person, is called a(n):

corporation

Agency problems are most likely to be associated with:

corporations

The growth of both sole proprietorships and partnerships is frequently limited by the firm's:

inability to raise cash.

______ are personally responsible for 100 percent of the firm's debts.

Both general partners and sole proprietors

Which one of the following statements regarding corporations is correct?

Corporations can have an unlimited life.

Which one of the following actions by a financial manager is most apt to create an agency problem?

Increasing current profits when doing so lowers the value of the company's equity

Which one of the following is a cash flow from a corporation into the financial markets?

Payment of loan interest

Which one of the following is a primary market transaction?

Sale of a new share of stock from a corporation to an individual investor

Public offerings of debt and equity must be registered with the:

Securities and Exchange Commission.

Which one of the following questions involves a capital budgeting decision?

Should the firm purchase a new machine for the production line?

Which one of the following is a working capital management decision?

Should the firm require immediate payment from customers or offer credit terms?

Which one of the following statements is correct?

Taxable income earned by a partnership is treated as individual income.

A firm's mixture of debt and equity financing is the result of its ______ decisions.

capital structure

Which form of business would be the best choice if it were necessary to raise large amounts of capital?

corporation

A firm's ______ is the firm's mix of short-term assets and short-term liabilities.

net working capital

Eduardo sold 500 shares of Northcutt Corporation stock on the New York Stock Exchange. This transaction:

occurred in the secondary market.

When evaluating the timing of a project's projected cash flows, a financial manager is analyzing:

when each cash flow is expected to occur.