FIN 3320 CHAPTER 1
Corporations in other countries are often called:
Joint stock companies Public limited companies
Organized auction markets include:
New York Stock Exchange
which of the following companies were involved in corporate scandals that led to Sarbanes-oxley?
Tyco Enron WorldCom
the costs incurred due to a conflict of interest between stockholders and management are called _____.
agency costs
an organization must prepare _____ and bylaws when forming a corporation.
articles of incorporation
which of the following can be used to encourage managers to act in the best interests of shareholders?
better prospects of promotion managerial compensation tied to performance
A corporation receives cash from financial markets by selling ________ and _________.
bonds stocks
the possible goal of profit maximization _____.
can be achieved by cost-cutting would probably be the most commonly sighted goal for a business
a general partnership has which of the following characteristics?
each owner has unlimited liability for all firm debts it is difficult to transfer ownership
what are the two basic classifications under which most potential financial goals fall?
earning or increasing profits controlling risk
it is sometimes argued that, left to themselves, managers tend to minimize the amount of resources over which they have control
false
a corporation is a distinct ______ entity and as such can have a name and take advantage of the legal powers of natural persons.
legal
the sarbanes-oxley act requires corporate officers to do which of the following
list any deficiencies in internal controls confirm the validity of the annual financial report accept responsibility for material errors in the annual report
Since ownership in a corporation can be dispersed over a huge number of stockholders, it can be argued that ______ effectively controls the firm.
management
In a shareholder-manager relationship, who is the agent?
managers
which of the following, according to the textbook, are possible financial goals for a company?
minimize costs maximize profits survival
a sole proprietorship is a business owned by ______ person(s).
one
when a corporation raises funds in the financial markets , the transaction occurs on the:
primary market
when a corporation raises funds in the financial markets, the transaction occurs on the:
primary market
which of the following provides a manager an incentive to perform well?
promotions
which one of these is an important mechanism used by unhappy stockholders to replace current management?
proxy fight
when one owner of a security sells the security to another person, the transaction takes place in the ______ market
secondary
a ______ is someone other than an owner or a creditor who potentially has a claim of the cash flows of a firm
stakeholder
when a corporation is formed , it is granted which of the following rights?
state citizenship for jurisdictional purposes the ability to issue stock legal powers to sue
the liability of a shareholder in a corporation is limited to which of these?
the amount the shareholder invested in the corporation
which one of these motivates managers to make good decisions?
threat of a hostile takeover
from the stockholder's perspective, what is the primary purpose of awarding stock options to managers?
to increase shareholders' wealth