FIN 300 Ch. 1
Which of the following occupations best fits into the corporate area of finance?
Chief financial officer
An employee has a claim on the cash flow of Martin's Machines. This claim is defined as a claim by one of the firm's:
stakeholders
The potential conflict of interest between a firm's owners and its managers is referred to as which type of conflict?
Agency
Which one of the following applies to a general partnership?
Any one of the partners can be held solely liable for all of the partnership's debt.
Which one of the following statements about a limited partnership is correct?
Any partner can transfer his or her ownership interest without ending the partnership.
Which one of the following situations is most apt to create an agency conflict?
Basing management bonuses on the length of employment
Which one of the following functions is generally a responsibility assigned to the corporate treasurer?
Capital expenditures
Which one of the following is most apt to align management's priorities with shareholders' interests?
Compensating managers with shares of stock that must be held for a minimum of three years
The Sarbanes-Oxley Act in 2002 was primarily prompted by which one of the following from the 1990s?
Corporate accounting and financial fraud
Working capital management includes which one of the following?
Determining which customers will be granted credit
Which one of the following is a capital structure decision?
Establishing the preferred debt-equity level
Will and Bill both enjoy sunshine, water, and surfboards. Thus, the two friends decided to create a business together renting surfboards, paddle boats, and inflatable devices in California. Will and Bill will equally share in the decision making and in the business profits or losses. Which type of business did they create if they both have full personal liability for the firm's debts?
General partnership
Which one of the following best describes the primary intent of the Sarbanes-Oxley Act of 2002?
Increase the protections against corporate fraud
Jamie is employed as a currency trader in the Japanese yen market. Her job falls into which one of the following areas of finance?
International finance
Which one of the following forms of business organization offers liability protection to some of its owners but not to all of its owners?
Limited liability company
Which one of the following is an advantage of being a limited partner?
Losses limited to capital invested
Which of the following statements is correct?
NASDAQ has more listed stocks than does the NYSE.
Which one of the following statements correctly applies to a sole proprietorship?
Obtaining additional equity is dependent on the owner's personal finances
Capital budgeting includes the evaluation of which of the following?
Size, timing, and risk of future cash flows
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?
Sole proprietorship
Which of the following correctly defines a common chain of command within a corporation?
The controller reports directly to the chief financial office
Which one of the following statements is correct?
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.
Security dealers:
buy and sell from their own inventory
Uptown Markets is financed with 45 percent debt and 55 percent equity. This mixture of debt and equity is referred to as the firm's
capital structure
Jenna has been promoted and is now in charge of all external financing. In other words, she is in charge of:
capital structure management
The goal of financial management is to increase the:
current market value per share.
When conducting a financial analysis of a firm, financial analysts:
frequently use accounting information
A sole proprietorship:
has its profits taxed as personal income
A corporation:
is a legal entity separate from its owners
A limited liability company (LLC):
prefers its profits be taxed as personal income to its owners.
The issuer of a security must be involved in all _____ transactions involving that security.
primary market
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:
secondary market
Levi had an unexpected surprise when he returned home this morning. He found that a chemical spill from a local manufacturer had spilled over onto his property. The potential claim that he has against this manufacturer is that of a(n):
stakeholder
The primary goal of financial management is to maximize:
the market value of existing stock.