FIN 331 CH:1 MULTIPLE CHOICE

Lester's BBQ has $121,000 in current assets and has $109,000 in current liabilities. these values are referred to as the firms:

Working capital

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

Working capital

Tim has been promoted and is now in charge of all fixed asset purchases. In other words, tim is in charge of:

Capital budgeting

Stadford, inc. is financed with 40% debt and 60% equity. this mixture of debt and equity is referred to as the firms:

Capital structure

Working capital management includes which of the following?

Determining which customers will be granted credit

A sole proprietorship:

Has its profits taxed as personal income

What is an example of a working capital decision?

How much cash should the firm keep in reserve?

Which of the following is most apt to create an agency conflict?

Rejecting a profitable project to protect empoyee jobs

Valerie bought 200 shares of Able stock today. Able stock has been trading for some time on the NYSE. Valerie's purchase occurred in which market?

Secondary market

Which of the following is most apt to create a situation where an agency conflict could arise?

Separating management from ownership

Margie opened a used bookstore and is bothe the 100% owner and the stores manager. Which type of business entity does margie own if she is personally liable for all the stores debts?

Sole proprietorship

Which of the following transactions occurred in the primary market?

South Wind Products sold 1,000 shares of newly issues stock to mike

Marti had an unexpected surprise when she ate her Lotsa Good cereal this morning. She found a piece of metal mixed in her cereal. The potential claim that Marti has against this firm is that of a(n):

Stakeholder

The federal government has a tax claim on the cash flows of the Window Store. This claim is defined as a claim by one of the firm's:

Stakeholders

Which inviduals commonly use finance in the course of their jobs?

1. chief financial officer 2. accountants 3. security analysts 4. strategic managers

the potential conflict of interest between a firm's owners and its managers is referred to as which type of conflict?

Agency

Which of the following is most apt to align management's priorities with shareholders' interest?

Compensating managers with shares of stock that must be held for three years before the shares can be sold

Todd and Cathy created a firm that is a separate legal entity and will share ownership of that firm on a 50-50 basis. Which type of entity did they create if they have no personal liability for the firm's debts?

Corporation

Which one of the following occupations best fits into the internal area of finance?

Currency trader

The goal of financial management is to increase the:

Current market value per share

What is an example of a capital structure decision?

Establishing the preferred debt-equity level

Which of the following best matches the primary goal of financial management?

Increasing the market value of the firm

Which of the following forms of business organization offers liability protection to some of its owners but not to all of its owners?

Limited liability company

The primary goal of financial management is to maximize which of the following?

Market value of existing stock

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

Maximize the market value of the equity