question

The corporate officer generally responsible for tasks related to tax management, cost accounting, financial accounting, and data processing is the:

answer

Corporate Controller.

question

The corporate officer generally responsible for tasks related to cash and credit management, financial planning, and capital expenditures is the:

answer

Corporate Treasurer.

question

The process of planning and managing a firm's Long-term investments is called:

answer

Capital budgeting.

question

The mixture of debt and equity used by the firm to finance its operations is called:

answer

Capital structure.

question

The management of the firm's short-term assets and liabilities is called:

answer

Working capital management

question

A business owned by a single individual is called a(n):

answer

Sole proprietorship.

question

A business formed by two or more individuals or entities is called a(n):

answer

Partnership.

question

The division of profits and losses between the members of a partnership is formalized in the:

answer

Partnership agreement.

question

A business created as a distinct legal entity composed of one or more individuals or entities is called a(n):

answer

Corporation.

question

The document that legally establishes domicile for a corporation is called the:

answer

Articles of incorporation.

question

The rules by which corporations govern themselves are called:

answer

Bylaws.

question

The primary goal of financial management is to:

answer

Maximize the current value per share of the existing stock.

question

The possibility of conflict of interest between the stockholders and management of the firm is called:

answer

The agency problem.

question

Agency costs are:

answer

The costs of the conflict of interest between stockholders and management.

question

A stakeholder is:

answer

A person or entity including a stockholder or creditor, who potentially has a claim on the cash flows of the firm.

question

The original sale of securities by governments and corporations occurs in the:

answer

Primary market.

question

The purchase and sale of securities after the original issuance occurs in the:

answer

Secondary market.

question

A market where dealers buy and sell securities for themselves, at their own risk, is called a(n):

answer

Dealer market.

question

A market where trading takes place between buyers and sellers directly is called a(n):

answer

Auction market.

question

The secondary market is:

answer

The market in which securities are bought and sold after original sale.

question

The Chief Financial Officer of a corporation is the:

answer

Vice President of Finance.

question

Deciding whether or not to open a new store is part of the process known as:

answer

Capital budgeting.

question

Capital structure refers to:

answer

The mixture of debt and equity

question

Working capital management refers to:

answer

The levels of cash and inventory held.

question

A business that is a distinct legal entity is a:

answer

Corporation.

question

The primary goal of financial management is to maximize the:

answer

Current value of each share of outstanding stock.

question

A proxy fight is:

answer

A method used by stockholders to replace corporate management.

question

Suppliers, customers, and employees of a corporation are called:

answer

Stakeholders.

question

A proprietorship is:

answer

A business owned by an individual who has unlimited personal liability.

question

Conflicts that arise between the interests of managers and stockholders are referred to as:

answer

Agency problems.

question

The primary market includes:

answer

The sale of new securities by a corporation on an exchange.

question

Stocks that trade on an exchange are referred to as:

answer

Listed stocks.

question

An individual who buys and sells stocks for his/her own account is a:

answer

Dealer.

question

Tasks related to tax management, cost accounting, financial accounting, and data processing are the responsibility of which corporate officer?

answer

The Corporate Controller.

question

The controller can be defined as the person who is generally responsible for overseeing the _____ of a firm.

answer

Accounting functions

question

The treasurer can be defined as the person who is generally responsible for overseeing the _____ of a firm.

answer

Financial planning

question

Capital budgeting is defined as the:

answer

Management of a firm's long-term investments.

question

A firm's capital structure is defined:

answer

As the combination of debt and equity used to finance the firm's operations

question

Working capital management refers specifically to:

answer

The oversight of a firm's current accounts

question

A sole proprietorship is best defined as a business owned by:

answer

A single individual who has unlimited liability for the firm's debts.

question

A general partnership is best defined as a business owned by:

answer

One or more individuals who are each totally responsible for the debts of the entity

question

An entity wherein one or more owners may elect to actively manage the firm while other owners choose limited liability instead of management responsibility is called a:

answer

Limited partnership.

question

Bylaws are:

answer

The rules by which corporations govern themselves.

question

The agency problem is best defined as a conflict of interest between a firm's:

answer

Stockholders and the firm's managers.

question

The primary goal of financial management is defined as the:

answer

Maximization of the current value per share of the outstanding stock.

question

An agency problem is said to exist when there is a conflict of interest between _____ and _____.

answer

A principal; his or her agent

question

The primary market is defined as the market

answer

Wherein the original sale of securities by the issuer to the general public occurs.

question

The secondary market is the market wherein:

answer

Shareholders buy from and sell to other shareholders.

question

A dealer is a person who:

answer

Buys and sells for themselves, at their own risk.

question

The person generally directly responsible for overseeing the tax management, cost accounting, financial accounting, and data processing functions is the:

answer

Controller.

question

The person generally directly responsible for overseeing the cash and credit functions, financial planning, and capital expenditures is the:

answer

Treasurer.

question

The process of planning and managing a firm's long-term investments is called:

answer

Capital budgeting

question

The mixture of debt and equity used by a firm to finance its operations is called:

answer

Capital structure

question

The management of a firm's short-term assets and liabilities is called:

answer

Working capital management.

question

Which one of the following correctly defines the chain of command in a typical corporate organizational structure?

answer

The chief executive officer reports to the board of directors.

question

A business formed by two or more individuals who each have unlimited liability for business debts is called a

answer

General partnership

question

The division of profits and losses among the members of a partnership is formalized in the:

answer

Partnership agreement.

question

A business created as a distinct legal entity composed of one or more individuals or entities is called a:

answer

Corporation.

question

The corporate document that sets forth the business purpose of a firm is the:

answer

Articles of incorporation

question

Capital structure decisions include which of the following?

answer

Determining the number of shares of stock to issue

question

The decision to issue debt rather than additional shares of stock is an example of:

answer

The capital structure decision

question

A conflict of interest between the stockholders and management of a firm is called:

answer

The agency problem

question

A stakeholder is:

answer

Any person or entity who potentially has a claim on the cash flows of the firm.

question

The original sale of securities by governments and corporations to the general public occurs in the:

answer

Primary market.

question

When one shareholder sells stock directly to another the transaction is said to occur in the:

answer

Secondary market.

question

A market where dealers buy and sell securities for themselves, at their own risk, is called a(n):

answer

Dealer market.

question

A market where trading takes place directly between buyers and sellers is called a(n):

answer

Auction market

question

This of the following is an answer to "What are the duties of a financial manager?" I. Deciding how much interest to pay the holders of the corporation's bonds. II. Deciding the mix of long-term debt and equity. III. Deciding which projects a firm should undertake. IV. Deciding how much short-term debt to use.

answer

II, III, and IV only

question

A financial manager is responsible for deciding whether or not new manufacturing equipment should be purchased to replace existing equipment. The new equipment would reduce labour expenses and would allow the firm to reduce its investment in inventory. Which of the financial management areas would be involved in the decision process? I. Capital budgeting. II. Capital structure management. III. Working capital management.

answer

I and III only

question

According to the statement of financial position model of the firm, corporate finance may be thought of as the analysis of three primary subject areas. Which of the following correctly lists these areas?

answer

Capital budgeting, capital structure, net working capital.

question

Which of the following is NOT considered one of the basic questions of corporate finance?

answer

At what rate of interest should a firm borrow?

question

In the evaluation of cash flow in a capital budgeting decision, which of the following must be considered? I. The size of the cash flow. II. The timing of the cash flow. III. The risk of the cash flow.

answer

I, II, III

question

Which of the following combinations of attributes would make a capital expenditure project desirable to a financial manager? I. The project is worth more to the firm than the cost to acquire it. II. The value of the cash flow generated by the project exceeds the project's cost. III. The project's cash flows have acceptable levels of risk and size, but not timing.

answer

I and II only

question

The term capital structure describes:

answer

The mixture of debt and equity a firm uses to finance its operations.

question

A financial manager is responsible for determining the firm's appropriate level of inventory. Which of the financial management areas addresses this decision? I. Capital budgeting. II. Capital structure management. III. Working capital management.

answer

III only

question

Which of the following statements is/are false concerning partnerships? I. Limited partners are responsible for all debts of the partnership. II. Limited partners generally do not manage the partnership. III. In a limited partnership, all partners share equally in the gains or losses.

answer

I only

question

Which of the following is an advantage of ownership of a corporation compared to that of a sole proprietorship?

answer

The corporation has an unlimited life.

question

Which of the following is a true statement concerning corporations?

answer

The life of the corporation is unlimited.

question

Sue Folker wants to start a new business decommissioning nuclear warheads and reactors. The work will involve significant hazards, and Sue is concerned about protecting her personal wealth from any losses the business might incur. If she is to be the majority owner of the business how should she structure it?

answer

As a corporation

question

Limited liability may be a characteristic of each of the following form(s) of organization EXCEPT a ________________.

answer

Sole proprietorship

question

Which of the following is a true statement concerning a general partnership? I. Partners are not responsible for the debts of the partnership. II. Partners generally do not manage the partnership. III. The income of a partnership is taxed at the partners' income tax rate.

answer

III only

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