Finance Chapters 1 - 4

A negotiated sale of securities by an issuer to a specific buyer is called a(n):

Private placement

The sale of securities to the general public by the issuer is known as a:

Public offering

Which one of the following statements is related to capital budgeting?

A firm should consider the size, risk, and timing of an asset's cash flows before deciding to purchase that asset.

Which one of the following statements about a limited partnership is correct?

A limited partnership can sell his or her interest without the partnership dissolving.

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

A manager receives a bonus because he or she has hired the most new employees in the past year.

The document which specifies how net profits and losses are to be divided among two or more individual owners, who are personally liable for the firm's debts, is called:

A partnership agreement

Working capital management includes which of the following; controlling the inventory level, determining when to pay suppliers, deciding how much long-term debt to assume, or controlling the amount of cash that is readily available:

Controlling the inventory level, determining when to pay suppliers, and controlling the amount of cash that is readily available.

A business entity which treated as a legal"person" is called a:

Corporation

Which of the following functions should be assigned to the controller rather than the treasurer?

Data processing

Over the counter markets are

Dealer markets

The control of a corporation ultimately lies with the:

Company stockholders

Which of the following are careers in finance: Insurance agent, security analyst, portfolio manager, corporate treasurer?

All.

NASDAQ is:

An over the counter market.

The legal papers which designate a firm's name, nature of business, and intended life are called the:

Articles of incorporation

A sole proprietor:

Assumes personal liability for all of the debts of the business.

A securities market with a physical location that is designed to match buyers with sellers is called a(n)

Auction market

Which of the following are considered financial institutions: Bank, hospital, insurance company, or home builder?

Bank and insurance company

The general purpose of a limited liability company is to:

Be taxed like a partnership and provide limited liability for the owners.

The term used to describe the study of means by which a manager can determine which long term investments to pursue, how to pay for those investments, and how to manage the daily finances of the firm:

Business finance

Which of the following are characteristics of a dealer market?

Buyers purchase securities for themselves at their own risk and transactions are done electronically without there being a physical location.

The rules which outline how a corporation will regulate itself are referred to as the:

Bylaws

All large company stocks such as GE and Microsoft:

Can trade on the exchange of their choosing as long as they qualify for listing.

The process of managing a firm's long-term investments is called:

Capital budgeting

The amount of debt and equity used by a firm to finance its operations is called the firm's:

Capital structure

When a firm decides to borrow money rather than issue stock to raise funds for a new project, the company is making a (n):

Capital structure decision.

The top financial officer in a firm is commonly referred to as the:

Chief financial officer

An agency problem frequently exists in situations where there is a separation of:

Company ownership and company management.

Under a general partnership:

Each partner receives only a proportionate share of the profits but is responsible for 100% of the partnership debts.

The purpose of capital budgeting is to:

Identify assets that produce value in excess of their cost.

If you purchase 100 shares if GE stock on the NYSE today, the transaction is most likely occurring:

In the secondary market.

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

Increasing the market value of the equity by improving the efficiency of operations.

The advantage of being a limited partner in a limited partnership is the ability to:

Invest in a partnership while limiting your losses to the amount you invested.

A business organization that is similar to a sole proprietorship but has two or more than owners is called a:

Partnership

The capital structure of a firm refers to the firm's:

Long-term debt and equity.

The Sarbanes Oxley act:

Makes the officers of a public corporation personally responsible for the firm's financial statements.

The primary goal of financial management is to maximize the:

Market value of the existing stock.

A corporation:

May be considered a resident of an individual state.

The primary advantages of a limited liability company are the:

Means of taxation and the limits on the liabilities assumed by the owners.

The bylaws of a corporation include information such as the:

Method by which directors are elected.

Which of the following transactions occurs in the primary market?

POQ sells new shares of POQ to Frederico.

When a company qualifies to have its securities traded on a particular exchange the stock of the company is said to be :

Scheduled with the exchange.

The market for trading securities after the original sale is called the:

Secondary market

Which of the following statements is correct concerning the secondary market?

Secondary markets can be either dealer or auction markets.

The most widely used form of business entity in the U.S. is the:

Sole proprietorship

Anyone other than the firm's stockholders or creditors that might have a claim on the cash flows of a firm is called a:

Stakeholder

A sole proprietorship is defined as a business:

That is owned by a single individual.

Which one of the following statements is correct concerning the financial markets in the U.S.?

The NYSE lists significantly less companies than does NASDAQ.

The primary market refers to:

The original sale of securities by the issuer.

Which one of the following statements is correct concerning the organizational chart of a corporation?

The tax manager generally reports to the controller rather than the treasurer.

In a general partnership, each general partner is personally liable for:

The total debts of the partnership, even if he or she was unaware that said debts were incurred.

The financial markets in the U.S.:

Transact trades in both the primary and secondary markets.

The person who is in charge of cash management and capital expenditures is called:

Treasurer

Which of the following questions falls into the financial topic of investments?

What are the risks involved owning a particular security?

Business finance addresses which one of the following questions?

Which long-term assets should a firm acquire?

Short-term assets and short-term liabilities are referred to as the firm's:

Working capital

The management of a firm's cash, inventory, and payables is referred to as:

Working capital management

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

Working capital of the firm.

Any situation where a potential conflict can arise between the firm's owners and its managers is referred to as a(n):

agency problem