FIN 3403-101
The officer responsible for managing the firm's cash flow is the
- Treasurer
A corporation receives cash from financial markets by selling ________ and ________.
- bonds - stocks
Which of the following is included in working capital? - long-term debt - current (short-term debt) - accounts receivable - retained earnings - accounts payable
- current (short-term) debt - accounts receivable - accounts payable
A good financial decision aims at which of the following? - increase the cost of capital - increase the value of the firm's existing stock - increase current dividends per share - increase market value of shareholders' equity
- increase the value of the shareholders' equity - increase the value of the firm's existing stock
A sole proprietorship is a business that_______.
- is owned by one person
Which of the following can be used to encourage managers to act in the best interest of shareholders? - a large organization and more employees - managerial compensation tied to performance - executive perks - better prospects of promotion
- managerial compensation tied to performance - better prospects of promotion
Which of the following, according to the textbook, are possible financial goals for a company? - maximize profits - minimize costs - survival - incur bankruptcy
- maximize profits - minimize costs - survival
If you hire a real-estate company to sell your house, you are most apt to encounter which of the following? - agency problem - capital structure problem - Securities Exchange Act if 1934 violation - Securities Act of 1933 violation
Agency problem
Which corporate officer is responsible for accurate financial reporting of the firm's activities?
Controller
Capital budgeting is concerned with making and managing expenditures on
Long-term investments
How is ownership transferred in a corporation?
Ownership is transferred by gifting or selling shares of stock.
The costs incurred due to a conflict of interest between stockholders and management are called _____.
agency costs
Which term applies to the mixture of debt and equity maintained by a firm?
capital structure
A business without separate legal authority formed by two or more people is known as______.
partnership
Organized auction markets include:
the New York Stock Exchange (NYSE)
The Sarbanes-Oxley Act requires corporate offices to do which of the following? - accept responsibility for material errors in the annual reports - list any deficiencies in the internal reports - confirm the validity of the annual financial report - limit their compensation and stock options
- accept responsibility for material errors in the annual reports - confirm the validity of the annual financial report
Because shareholders get paid last after all other obligations are satisfied, they are often called:
- residual owners
When a corporation is formed, it is granted which of the following? - corporate life up to 100 years - state citizenship for jurisdiction purposes - the ability to issue stock - legal powers to sue
- state citizenship for jurisdiction purposes - the ability to issue stock - legal powers to sue
Which of the follow are considered stakeholders in a company? - suppliers - government - competitor - employees
- suppliers - government - employees
Which one of these motivates managers to make good decisions? - threat of hostile takeover - complacent shareholders - complacent board of directors - lack of interface with government authorities
- threat of hostile take over
In a large corporation, the financial manager is primarily responsible for...
-Long-term investment decisions -Financial aspects of operations, such as collections of accounts receivables -Financing decisions
Which of the following positions generally report to the chief financial officer (CFO)?
-Treasurer -Controller
True or False: It is sometimes argued that, left to themselves, managers tend to minimize the amount of resources over which they have control.
False
True or false: Shareholders are the ONLY stakeholder in a firm as they are the owners.
False
_____ are frequently used to encourage key managers to maximize the value of the firms stock.
Stock options
The owners of a corporation are called______.
Stockholders
What is the main goal of financial management?
To maximize current value per share of existing stock.
The need to monitor management activities is an example of a _______ (direct/indirect) agency cost.
direct
In financial markets, debt and _________ securities are bought and sold.
equity
A sole proprietorship has _____ personal liability for all business debts and obligations.
unlimited
The life of a corporation_____.
unlimited
The goal of a for-profit business is to______ existing owners' equity.
maximize
When a corporation raises funds in the financial markets, the transaction occurs on the:
primary market
Which one of these provides a manager an incentive to perform well? - lack of takeover threats - low pay - agency problems - promotions
promotions
Which of these is an important mechanism used by unhappy stockholders to replace current management? - prospectus - perpetual debt - ponzi scheme - proxy fight
proxy fight
When one owner of a security sells the security to another person, the transaction takes place in the
secondary