Econ 24

The primary goal of financial management is to maximize which one of the following for a corporation? Current profits Market share Number of shares outstanding Market value of existing growth

Market value of existing growth

Determining which inventory to purchase and how much inventory to keep on hand

Working Capital Management

Shareholder A sold shares of Maplewood Cabinets stock to Shareholder B. The stock is listed on the NYSE. This trade occurred in which of the following? primary market secondary market dealer market auction market

secondary market auction market

Which one of the following transactions occurred in the primary market? Maria gave 100 shares of Alto stock to her best friend. Gene purchased 300 shares of Alto stock from Ted. South Wind Products sold 1,000 shares of newly issued stock to Mike. The president of Trecco, Inc. sold 500 shares of Trecco stock to his son.

South Wind Products sold 1,000 shares of newly issued stock to Mike.

Planning and managing long-term investments

capital budgeting

Establishing the preferred debt-equity level

capital structure

Which form of business structure is most associated with agency problems? sole proprietorship general partnership limited partnership corporation

corporation

Which one of the following is an unintended result of the Sarbanes-Oxley Act? more detailed and accurate financial reporting corporations delisting from major exchanges increased responsibility for corporate officers identification of internal control weaknesses

corporations delisting from major exchanges

Which one of the following is a capital structure decision? determining which one of two projects to accept determining the amount of funds needed to finance customer purchases of a new product determining how much debt should be assumed to fund a project determining how much inventory will be needed to support a project

determining how much debt should be assumed to fund a project

Which one of the following is most apt to align management's priorities with shareholders' interests? Increasing the number of paid holidays that long-term employees are entitled to receive Allowing a manager to decorate his or her own office once he or she has been in that office for a period of 3 years or more Increasing employee retirement benefits Compensating managers with shares of stock that must be held for 3 years before the shares can be sold

Compensating managers with shares of stock that must be held for 3 years before the shares can be sold

Which one of the following forms of business organization offers liability protection to some of its owners but not to all of its owners? Sole proprietorship General partnership Limited partnership Limited liability company

Limited partnership

Which one of the following is a working capital management decision? determining whether to pay cash for a purchase or use the credit offered by the supplier determining the amount of long-term debt required to complete a project determining the number of shares of stock to issue to fund an acquisition determining whether or not a project should be accepted

determining whether to pay cash for a purchase or use the credit offered by the supplier

Which one of the following actions by a financial manager is most apt to create an agency problem? refusing to borrow money when doing so will create losses for the firm refusing to lower selling prices if doing so will reduce the net profits refusing to expand the company if doing so will lower the value of the equity increasing current profits when doing so lowers the value of the firm's equity

increasing current profits when doing so lowers the value of the firm's equity

Which of the following are advantages of the corporate form of business ownership? limited liability for firm debt double taxation ability to raise capital unlimited firm life

limited liability for firm debt ability to raise capital unlimited firm life

Limited liability companies are primarily designed to: provide the benefits of the corporate structure to foreign-based entities allow companies to reorganize themselves through the bankruptcy process. allow a portion of its owners to enjoy limited liability while granting the other portion of its owners control over the entity. provide limited liability while avoiding double taxation.

provide limited liability while avoiding double taxation.