Finance chapter 1

Which of these topics is not of especial interest to a financial manager?

product development

What is the primary objective of an auction market?

to bring buyers and sellers together

What is the main goal of financial management?

to maximize the current share value

A sole proprietor has Blank______ personal liability for all business debts and obligations. Multiple choice question.

unlimited

What three subjects is the financial manager concerned with?

working capital management capital structure capital budgeting

True or false: In a large corporation, stockholders and managers are usually separate groups.

True

The New York Stock Exchange is a(n)

auction market

An organization must prepare Blank______ and bylaws when forming a corporation.

articles of incorporation

Which of the following positions generally report to the chief financial officer (CFO)?

controller treasurer

A business without separate legal authority formed by two or more people is known as a

partnership

The five basic areas of finance include investments, financial institutions, fintech, international finance, and

corporate finance

Which of the following are included in a firm's capital structure?

equity long-term debt

The threat of Blank______ motivates managers to make good decisions. Multiple choice question.

a takeover

The Sarbanes-Oxley Act requires corporate officers to:

confirm the validity of the financial statements. be responsible for errors in the annual report.

The Blank______ office is responsible for corporate tax reporting. Multiple choice question. ombudsman's

controller's

The Sarbanes-Oxley Act is intended to strengthen protection against:

corporate accounting fraud and financial malpractice

The federal government taxes which of the following?

corporate earnings and shareholder dividends

A partnership in which partners share in gains or losses and carry unlimited liability for all partnership debts is called a

general partnership

When one owner or creditor sells to another, the transaction takes place in the Blank______ market. Multiple choice question.

secondary

According to the textbook, which of the following is not one of the three main questions to be addressed if you wanted to start your own business?

How many employees will I need?

Which corporate officer is responsible for accurate financial accounting of the firm's activities?

controller

Which term applies to the mixture of debt and equity maintained by a firm?

capital structure

In large firms, financial activity is usually associated with which top officer?

chief financial officer

Businesses are motivated to organize as corporations because stockholders in a corporation have Blank______ liability for corporate debts.

limited

In a limited partnership, a limited partner's liability for business debts is

limited to their cash contribution to the partnership

Capital budgeting is concerned with making and managing expenditures on

long-term assets

______ and ownership are separated, a corporation's life is unlimited.

management

Which one of these is an important mechanism used by unhappy stockholders to replace current management?

proxy fight

______ budgeting is the process of planning and managing a firm's long-term assets.

Capital

When are corporate profits taxed?

Corporations pay taxes on corporate profits. Individuals pay taxes on corporate dividends.

A general partnership has which of the following characteristics?

Each owner has unlimited liability for all firm debts. All the partners share in gains or losses of the partnership.

True or false: "Profit maximization" is the goal for the management of a corporation in the short run only.

False

Business finance is broadly concerned with which of the following?

How to finance long-term investments? Which long-term investment to make? How to manage day-to-day finances of the firm?

Which of the following are defining features of the primary market?

It is the market where initial public offerings are made. Proceeds from the sale of securities go to the issuing firm.

True or false: A corporation borrows money in its own name.

True

According to Figure 1.2, where does cash generated by a corporation typically go?

reinvested in the firm paid to shareholders and creditors to pay corporate taxes

When a corporation is formed, it is granted which of the following rights?

the ability to issue stock legal powers to sue

A shareholder's liability is limited to which of these?

the amount the shareholder invested in the corporation