Advanced Corporate Finance- Midterm

Shareholders can replace company management by implementing:

A proxy fight

Corporate dividends represent:

Aftertax income from the corporation which becomes taxable income for the recipient

Deciding which long-term investment a firm should make is a ______ decision.

Capital budgeting

A firm's mixture of debt and equity financing is the result of its ______ decisions.

Capital structure

Determining the number of shares of stock to issue is an example of a ______ decision.

Capital structure

A business that is a legal entity separate from the owners, yet treated as a legal person, is called a(n):

Corporation

Which form of business would be the best choice if it were necessary to raise large amounts of capital?

Corporation

Agency problems are most likely to be associated with:

Corporations

Corporate bylaws:

Determine how a corporation regulates itself

Which one of the following is a disadvantage of the corporate form of business?

Distributed profits may experience double taxation

A firm owned by two or more people who each have unlimited liability for all of the firm's debts is called a:

General partnership

Which one of the following questions involves a capital structure decision?

How much debt should the firm incur to fund a project?

Which one of the following questions is a working capital management decision?

How much inventory should the company keep on hand?

The growth of both sole proprietorships and partnerships is frequently limited by the firm's:

Inability to raise cash.

Abigail, Blake and Camila plan to launch a business. Abigail will fund the venture but wants to limit her liability to her initial investment. She has no interest in the daily operations. Blake will contribute his full efforts on a daily basis but has limited funds to invest in the business. Camila will be involved as a consultant and manager and will also contribute funds. Blake and Camila are willing to accept liability for the firm's debts as they feel they have nothing to lose by doing so. All three individuals will share in the firm's profits and wish to minimize the initial costs of organizing the business. Which form of business entity should these individuals adopt?

Limited partnership

The Sarbanes-Oxley Act of 2002 holds a public company's ______ responsible for the accuracy of the company's financial statements.

Managers

Which one of the following best states the primary goal of financial management?

Maximize the current value per share

A firm's ______ is the firm's mix of short-term assets and short-term liabilities.

Net working capital

Eduardo sold 500 shares of Northcutt Corporation stock on the New York Stock Exchange. This transaction:

Occurred in the secondary market

Which one of the following would cause a cash outflow from a corporation?

Paying dividends

Which of the following actions would be most likely to decrease agency costs for the firm?

Reward high performing employees with shares of stock

Which one of the following questions involves a capital budgeting decision?

Should the firm purchase a new machine for the production line?

A firm owned by a single person who has unlimited liability for the firm's debt is called a:

Sole proprietorship

In a typical corporate organizational structure:

The controller reports to the chief financial officer

Which one of the following statements is correct concerning the NYSE?

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