BCOR 340 Exam 1

Which one of the following best describes the primary intent of the Sarbanes-Oxley Act of 2002? Increase the number of firms that "go dark" -Decrease the number of corporations that can be publicly traded -Increase the protections against corporate fraud -Increase the dividends paid to shareholders -Limit secondary issues of corporate securities

Increase the protections against corporate fraud

Which one of the following statements is correct? -The NYSE is a dealer market. -NASDAQ has more listed stocks than does the NYSE. -The trading floor for NASDAQ is located in Chicago. -NASDAQ is an auction market. -NASDAQ has the most stringent listing requirements of any U.S. exchange.

NASDAQ has more listed stocks than does the NYSE.

Which one of the following is the correct formula for computing the present value of $600 to be received in 6 years? The discount rate is 7 percent. PV = $600/(1 + .07)6 PV = $600 ×(.07 ×6) PV = $600/(1 + 6).07 PV = $600 (1 + .06)7 PV = $600 (1 + .07)6

PV = $600/(1 + .07)6

Corporate shareholders: are protected from all financial losses. have basically no control over the actual corporation. have the ability to change the corporation's bylaws. are proportionately liable for the firm's debts. receive tax-free distributions since all profits are taxed at the corporate level.

have the ability to change the corporation's bylaws.

amie earned $14 in interest on her savings account last year. She has decided to leave the $14 in her account so that she can earn interest on the $14 this year. The interest earned on last year's interest earnings is called: accrued interest. simple interest. complex interest. discounted interest. interest on interest.

interest on interest.

One example of a primary market transaction would be the: -sale of 100 shares of stock by Maria to her best friend. -sale of 1,000 shares of newly issued stock by Alt Company to Miquel. -sale by Terry of 50,000 shares of stock to his brother. -sale of 5,000 shares of stock owned by a corporate CEO to his son. -purchase by Theo of 5,000 shares of stock from his father.

sale of 1,000 shares of newly issued stock by Alt Company to Miquel.

You contacted your stock broker this morning and placed an order to sell 300 shares of a stock that trades on the NYSE. This sale will occur in the: dealer market. over-the-counter market. tertiary market. secondary market. primary market.

secondary market

Lucas expects to receive a sales bonus of $7,500 one year from now. The process of determining how much that bonus is worth today is called: discounting. simplifying. aggregating. compounding. extrapolating.

discounting

The Sarbanes-Oxley Act of 2002 has: -essentially made officers of publicly traded firms personally responsible for the firm's financial statements. -decreased the number of U.S. firms going public on foreign exchanges. -reduced the annual compliance costs of all publicly traded firms in the U.S. -greatly increased the number of U.S. firms that are going public for the first time. -decreased senior management's involvement in the corporate annual report.

essentially made officers of publicly traded firms personally responsible for the firm's financial statements.

Which one of the following applies to a general partnership? The profits of a general partnership are taxed the same as those of a corporation. The profits of the firm are taxed as a separate entity. Each partner's liability for the firm's debts is limited to each partner's investment in the firm. Any one of the partners can be held solely liable for all of the partnership's debt. The firm's operations must be controlled by a single partner.

Any one of the partners can be held solely liable for all of the partnership's debt.

Working capital management includes which one of the following? -Determining which customers will be granted credit -Determining how many new shares of stock should be issued -Deciding whether to purchase a new machine or fix a currently owned machine -Deciding which new projects to accept -Establishing the target debt-equity ratio

Determining which customers will be granted credit

Margie opened a used bookstore and is both the 100 percent owner and the store's manager. Which type of business entity does Margie own if she is personally liable for all the store's debts? General partnership Joint stock company Sole proprietorship Limited partnership Corporation

Sole proprietorship

Which one of the following correctly defines a common chain of command within a corporation? The credit manager reports directly to the controller. The controller reports directly to the corporate treasurer. The controller reports directly to the chief financial officer. The chief financial officer reports directly to the board of directors. The treasurer reports directly to the board of directors.

The controller reports directly to the chief financial officer.

Matt and Alicia created a firm that is a separate legal entity and will share ownership of that firm on a 75/25 basis. Which type of entity did they create if they have no personal liability for the firm's debts? Limited partnership Sole proprietorship General partnership Public company Corporation

corporation

Today, Charity wants to invest less than $3,000 with the goal of receiving $3,000 back some time in the future. Which one of the following statements is correct? The lower the rate of interest she earns, the shorter the time she will have to wait to reach her goal. The period of time she has to wait until she reaches her goal is unaffected by the compounding of interest. The length of time she has to wait to reach her goal is not related to the interest rate she earns. She will have to wait longer if she earns 6 percent compound interest instead of 6 percent simple interest. The period of time she has to wait decreases as the amount she invests increases.

The period of time she has to wait decreases as the amount she invests increases.

Which one of the following statements is correct? -All of the major stock exchanges are U.S. based. -The primary purpose of the NYSE is to match buyers with sellers. -OTC markets have a physical trading floor generally located in either New York City or Chicago. -The Chicago Stock Exchange is a dealer market. -The NYSE was created by the National Association of Securities Dealers in the early 1930s.

The primary purpose of the NYSE is to match buyers with sellers.

One advantage of the corporate form of organization is the: ability to raise larger sums of equity capital than other organizational forms. unlimited liability for its shareholders. double taxation of profits. taxation of the corporate profits. ease of formation compared to other organizational forms.

ability to raise larger sums of equity capital than other organizational forms.

Probably the least effective means of aligning management goals with shareholder interests is: -the potential for a proxy fight by an unhappy segment of shareholders. -holding management salaries steady while increasing stock option grants. -the threat of a takeover of the firm. -basing all management bonuses on performance goals. -automatically increasing management salaries on an annual basis.

automatically increasing management salaries on an annual basis.

The daily financial operations of a firm are primarily controlled by managing the: -working capital. -capital structure. -capital budget. -long-term liabilities. -total debt level.

working capital.