ch1

Security dealers: buy and sell from their own inventory. operate exclusively in auction markets. operate on a physical trading floor. are limited to trading non-listed stocks. match buyers with sellers.

buy and sell from their own inventory.

Which one of the following functions should be assigned to the corporate treasurer rather than to the controller? Cost accounting Cash management Financial accounting Tax management Data processing

cash management

The goal of financial management is to increase the: number of shares outstanding. book value of equity. current market value per share. dividends paid per share. future value of the firm's total equity.

current market value per share.

A sole proprietorship: has its profits taxed as personal income. involves significant legal costs during the formation process. can generally raise significant capital from non-owner sources. has an unlimited life. provides limited financial liability for its owner.

has its profits taxed as personal income.

The primary goal of financial management is most associated with increasing the: traffic flow within the firm's stores. market value of the firm. firm's liquidity. fixed costs while lowering the variable costs. dollar amount of each sale.

market value of the firm.

A limited liability company (LLC): that meets the IRS criteria to be an LLC will be taxed like a corporation. is a hybrid between a sole proprietorship and a partnership. cannot be created for professional service firms, such as accountants and attorneys. prefers its profits be taxed as personal income to its owners. provides limited liability for some, but not all, of its owners.

prefers its profits be taxed as personal income to its owners

Limited liability companies are primarily designed to: provide the benefits of the corporate structure only to foreign-based entities. allow companies to reorganize themselves through the bankruptcy process. allow a portion of their owners to enjoy limited liability while granting the other portion of their owners control over the entity. provide limited liability while avoiding double taxation. spin off a wholly owned subsidiary.

provide limited liability while avoiding double taxation.

The Sarbanes-Oxley Act in 2002 was primarily prompted by which one of the following from the 1990s? Corporate accounting and financial fraud Increased executive compensation Increased use of tax loopholes Increased foreign investment in U.S. stock markets Increased stock market volatility

Corporate accounting and financial fraud

Which of the following is not a basic area of finance as described by the text? Accounting International finance Investments Fintech Corporate finance

Accounting

Which one of the following statements is correct? All stock trades between existing shareholders are primary market transactions. All stock transactions are secondary market transactions. All secondary markets are dealer markets. All over-the-counter sales occur in dealer markets. All secondary markets are broker markets.

All over-the-counter sales occur in dealer markets.

Which one of the following occupations best fits into the corporate area of finance? Treasury bill analyst Mortgage broker Chief financial officer Insurance risk manager Local bank manager

Chief financial officer

Which one of the following is a working capital decision? What is the cost of debt financing? What debt-equity ratio is best suited to the firm? How should the firm raise additional capital to fund its expansion? How much cash should the firm keep in reserve? Should the firm borrow money for five or for ten years?

How much cash should the firm keep in reserve?

Silvia is employed as a currency trader in the Japanese yen market. Her job falls into which one of the following areas of finance? Corporate finance Personal finance International finance Capital management Financial institutions

International finance

What is the primary goal of financial management for a sole proprietorship? Minimize the tax impact on the proprietor Minimize the reliance on fixed costs Decrease long-term debt to reduce the risk to the owner Maximize net income given the current resources of the firm Maximize the market value of the equity

Maximize the market value of the equity

Which one of the following statements is correct? Nasdaq has more listed stocks than does the NYSE. Nasdaq is an auction market. The trading floor for Nasdaq is located in Chicago. The NYSE is a dealer market. Nasdaq has the most stringent listing requirements of any U.S. exchange.

Nasdaq has more listed stocks than does the NYSE.

Which one of the following statements about a limited partnership is correct? All partners are treated equally. All partners have their losses limited to their capital investment in the partnership. Any partner can transfer his or her ownership interest without ending the partnership. There must be at least one general partner. Equity financing is easy to obtain and unlimited.

There must be at least one general partner.

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: over-the-counter market. secondary market. dealer market. primary market. tertiary market.

secondary market

Levi had an unexpected surprise when he returned home this morning. He found that a chemical spill from a local manufacturer had spilled over onto his property. The potential claim that he has against this manufacturer is that of a(n): debtholder. shareholder. stakeholder. agent. general creditor.

stakeholder