FIN300 Terms

Which one of the following functions should be the responsibility of the controller rather than the treasurer?1, Depositing cash receipts2, Processing cost reports3, Analyzing equipment purchases4, Approving credit for a customer5, Paying a vendor

Processing cost reports

Which one of the following is a primary market transaction?1, Sale of currently outstanding stock by a dealer to an individual investor2, Sale of a new share of stock to an individual investor3, Stock ownership transfer from one shareholder to another shareholder4, Gift of stock from one shareholder to another shareholder5, Gift of stock by a shareholder to a family member

Sale of a new share of stock to an individual investor

Which one of the following is a working capital management decision?1, What type(s) of equipment is (are) needed to complete a current project?2, Should the firm pay cash for a purchase or use the credit offered by the supplier?3, What amount of long-term debt is required to complete a project?4, How many shares of stock should the firm issue to fund an acquisition?5, Should a project should be accepted?

Should the firm pay cash for a purchase or use the credit offered

The decision to issue additional shares of stock is an example of:1, working capital management.2, a net working capital decision.3, capital budgeting.4, a controller's duties.5, a capital structure decision.

a capital structure decision.

One disadvantage of the corporate form of business ownership is the:1, limited liability of its shareholders for the firm's debts.2, double taxation of distributed profits.3, firm's greater ability to raise capital than other forms of ownership.4, firm's potential for an unlimited life.5, firm's ability to issue additional shares of stock.

double taxation of distributed profits.

Decisions made by financial managers should primarily focus on increasing the:1, size of the firm.2, growth rate of the firm.3, gross profit per unit produced.4, market value per share of outstanding stock.5, total sales.

market value per share of outstanding stock

The articles of incorporation:1, describe the purpose of the firm and set forth the number of shares of stock that can be issued.2, are amended periodically especially prior to corporate elections.3, explain how corporate directors are to be elected and the length of their terms.4, sets forth the procedures by which a firm regulates itself.5, include only the corporation's name and intended life.

1, describe the purpose of the firm and set forth the number of shares of stock that can be issued.

Which one of the following statements is correct?1, The majority of firms in the U.S. are structured as corporations.2, Corporate profits are taxable income to the shareholders when earned.3, Corporations can have an unlimited life.4, Shareholders are protected from all potential losses.5, Shareholders directly elect the corporate president.

Corporations can have an unlimited life.

Shareholder A sold 500 shares of ABC stock on the New York Stock Exchange. This transaction:1, took place in the primary market.2, occurred in a dealer market.3, was facilitated in the secondary market.4, involved a proxy.5, was a private placement.

was facilitated in the secondary market.

The interest rate that is most commonly quoted by a lender is referred to as the:1, annual percentage rate.2, compound rate.3, effective annual rate.4, simple rate.5, common rate.

1, annual percentage rate.

Which one of the following parties has ultimate control of a corporation?1, Chairman of the board2, Board of directors3, Chief executive officer4, Chief operating officer5, Shareholders

Shareholders

The interest earned on both the initial principal and the interest reinvested from prior periods is called:1, free interest.2, dual interest.3, simple interest.4, interest on interest.5, compound interest.

compound interest.

The process of determining the present value of future cash flows in order to know their value today is referred to as:1, compound interest valuation.interest on interest valuation.2, discounted cash flow valuation.3, future value interest factoring.4, complex factoring.

discounted cash flow valuation.

Which one of the following statements related to loan interest rates is correct?1, The annual percentage rate considers the compounding of interest.2, When comparing loans you should compare the effective annual rates.3, Lenders are most apt to quote the effective annual rate.4, Regardless of the compounding period, the effective annual rate will always be higher than the annual percentage rate.5, The more frequent the compounding period, the lower the effective annual rate given a fixed annual percentage rate.

2, When comparing loans you should compare the effective annual rates.

A business owned by a solitary individual who has unlimited liability for the firm's debt is called a:1, corporation.2, sole proprietorship.3, general partnership.4, limited partnership.5, limited liability company.

2, sole proprietorship.

A business formed by two or more individuals who each have unlimited liability for all of the firm's business debts is called a:1, corporation.2, sole proprietorship.3, general partnership.4, limited partnership.5, limited liability company.

3, general partnership.

Sally and Alicia are equal general partners in a business. They are content with their current management and tax situation but are uncomfortable with their unlimited liability. Which form of business entity should they consider as a replacement to their current arrangement assuming they wish to remain the only two owners of the business?1, Sole proprietorship2, Joint stock company3, Limited partnership4, Limited liability company5, Corporation

4, Limited liability company

Public offerings of debt and equity must be registered with the:1, New York Board of Governors.2, Federal Reserve.3, NYSE Registration Office.4, Securities and Exchange Commission.5, Market Dealers Exchange.

4, Securities and Exchange Commission.

What is the relationship between the present value and future value interest factors?1, The present value and future value factors are equal to each other.2, The present value factor is the exponent of the future value factor.3, The future value factor is the exponent of the present value factor.4, The factors are reciprocals of each other.5, There is no relationship between these two factors.

4, The factors are reciprocals of each other.

Which one of the following terms is defined as the management of a firm's long-term investments? 1, Working capital management 2, Financial allocation 3, Agency cost analysis 4, Capital budgeting 5, Capital structure

5, Capital structure

Which one of the following parties has ultimate control of a corporation?1, Chairman of the board2, Board of directors3, Chief executive officer4, Chief operating officer5, Shareholders

5, Shareholders

Corporate bylaws:1, must be amended should a firm decide to increase the number of shares authorized.2, cannot be amended once adopted.3, define the name by which the firm will operate.4, describe the intended life and purpose of the organization.5, determine how a corporation regulates itself

5, determine how a corporation regulates itself.

An example of a capital budgeting decision is deciding:1, how many shares of stock to issue.2, whether or not to purchase a new machine for the production line.3, how to refinance a debt issue that is maturing.4, how much inventory to keep on hand.5, how much money should be kept in the checking account.

5, how much money should be kept in the checking account.

A perpetuity is defined as:1, a limited number of equal payments paid in even time increments.2, payments of equal amounts that are paid irregularly but indefinitely.3, varying amounts that are paid at even intervals forever.4, unending equal payments paid at equal time intervals.4, unending equal payments paid at either equal or unequal time intervals.5, unending equal payments paid at equal time intervals.

5, unending equal payments paid at equal time intervals.

Which one of these statements related to growing annuities and perpetuities is correct?1, You can compute the present value of a growing annuity but not a growing perpetuity.3, In computing the present value of a growing annuity, you discount the cash flows using the growth rate as the discount rate.4, The future value of an annuity will decrease if the growth rate is increased.5, An increase in the rate of growth will decrease the present value of an annuity.6, The present value of a growing perpetuity will decrease if the discount rate is increased.

6, The present value of a growing perpetuity will decrease if the discount rate is increased.

Which one of the following best illustrates that the management of a firm is adhering to the goal of financial management?1, An increase in the amount of the quarterly dividend2, A decrease in the per unit production costs3, An increase in the number of shares outstanding4, A decrease in the net working capital5, An increase in the market value per share

An increase in the market value per share

Which one of the following best states the primary goal of financial management?1, Maximize current dividends per share2, Maximize the current value per share3, Increase cash flow and avoid financial distress4, Minimize operational costs while maximizing firm efficiency5, Maintain steady growth while increasing current profits

Maximize the current value per share

Which one of the following statements is correct concerning the NYSE?1, The publicly traded shares of a NYSE-listed firm must be worth at least $250 million.2, The NYSE is the largest dealer market for listed securities in the United States.3, The listing requirements for the NYSE are more stringent than those of NASDAQ.4, Any corporation desiring to be listed on the NYSE can do so for a fee.5, The NYSE is an OTC market functioning as both a primary and a secondary market.

The listing requirements for the NYSE are more stringent than those of NASDAQ.

Financial managers should strive to maximize the current value per share of the existing stock to:1, guarantee the company will grow in size at the maximum possible rate.2, increase employee salaries.3, best represent the interests of the current shareholders.4, increase the current dividends per share.5, provide managers with shares of stock as part of their compensation.

best represent the interests of the current shareholders.

An ordinary annuity is best defined as:1, increasing payments paid for a definitive period of time.2, increasing payments paid forever.3, equal payments paid at the end of regular intervals over a stated time period.4, equal payments paid at the beginning of regular intervals for a limited time period.5, equal payments that occur at set intervals for an unlimited period of time.

equal payments paid at the end of regular intervals over a stated time period.