Finance 303 Final Exam

An agency issue is most apt to develop when: -a firm encounters a period of stagnant growth. -a firm downsizes. -the control of a firm is separated from the firm's ownership. -the firm's owner is also its key manager. -a firm is structured as a general partnership.

the control of a firm is separated from the firm's ownership.

Which one of the following occupations best fits into the corporate area of finance? Mortgage broker Treasury bill analyst Chief financial officer Insurance risk manager Local bank manager

Chief financial officer

Which one of the following is an advantage of being a limited partner? Nontaxable share of any profits Control over the daily operations of the firm Losses limited to capital invested Unlimited profits without risk of incurring a loss Active market for ownership interest

Losses limited to capital invested

What is the primary goal of financial management for a sole proprietorship? Maximize net income given the current resources of the firm Decrease long-term debt to reduce the risk to the owner Minimize the tax impact on the proprietor Maximize the market value of the equity Minimize the reliance on fixed costs

Maximize the market value of the equity

In a general partnership, each partner is personally liable for: only the partnership debts that he or she personally created. his or her proportionate share of all partnership debts regardless of which partner incurred that debt. the total debts of the partnership, even if he or she was unaware of those debts. the debts of the partnership up to the amount he or she invested in the firm. all personal and partnership debts incurred by any partner, even if he or she was unaware of those debts.

the total debts of the partnership, even if he or she was unaware of those debts

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

working capital