Question 1

The goal of financial management is to increase the:

Accepted Answer

A)  future value of the firm's total equity.
B)  book value of equity.
C)  dividends paid per share.
D)  current market value per share
E)  number of shares outstanding.F) A) and E)
G) B) and D)

Question 2

Which one of the following statements is correct?

Accepted Answer

A)  All of the major stock exchanges are U.S.based.
B)  The NYSE was created by the National Association of Securities Dealers in the early 1930s.
C)  The Chicago Stock Exchange is a dealer market.
D)  OTC markets have a physical trading floor generally located in either New York City or Chicago.
E)  The primary purpose of the NYSE is to match buyers with sellers.F) D) and E)
G) C) and D)

Question 3

Corporate shareholders:

Accepted Answer

A)  are proportionately liable for the firm's debts.
B)  are protected from all financial losses.
C)  have the ability to change the corporation's bylaws.
D)  receive tax-free distributions since all profits are taxed at the corporate level.
E)  have basically no control over the actual corporation.F) A) and E)
G) None of the above

Question 4

An auction market:

Accepted Answer

A)  is an electronic means of exchanging securities.
B)  has a physical trading floor.
C)  handles primary market transactions exclusively.
D)  is also referred to as an OTC market.
E)  is dealer-based.F) B) and D)
G) A) and D)

Question 5

One advantage of the corporate form of organization is the:

Accepted Answer

A)  taxation of the corporate profits.
B)  unlimited liability for its shareholders.
C)  double taxation of profits.
D)  ability to raise larger sums of equity capital than other organizational forms.
E)  ease of formation compared to other organizational forms.F) A) and B)
G) B) and D)

Question 6

The Sarbanes-Oxley Act:

Accepted Answer

A)  require the corporate officers to personally attest that the financial statements are a fair representation of the company's financial results.
B)  requires all corporations to fully disclose its financial dealings to the general public.
C)  places the responsibility for a firm's financial statements solely on the chief financial officer.
D)  requires that the board of directors be solely responsible for the firm's financial dealings.
E)  places total responsibility for the financial statements of a firm on the auditor who certifies the statements.F) D) and E)
G) A) and E)

Question 7

The shareholders of Weil's Markets would benefit if the firm were to be acquired by Better Foods.However,Weil's board of directors rejects the acquisition offer.This is an example of:

Accepted Answer

A)  a corporate takeover.
B)  a capital structure issue.
C)  a working capital decision.
D)  an agency conflict.
E)  a compensation issue.F) D) and E)
G) C) and D)

Question 8

Which one of the following is a capital structure decision?

Accepted Answer

A)  Determining the optimal inventory level
B)  Establishing the preferred debt-equity level
C)  Selecting new equipment to purchase
D)  Setting the terms of sale for credit sales
E)  Determining when suppliers should be paidF) A) and D)
G) C) and E)

Question 9

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:

Accepted Answer

A)  dealer market.
B)  over-the-counter market.
C)  secondary market.
D)  primary market.
E)  tertiary market.F) A) and D)
G) A) and C)

Question 10

The Sarbanes-Oxley Act of 2002 has:

Accepted Answer

A)  reduced the annual compliance costs of all publicly traded firms in the U.S.
B)  decreased senior management's involvement in the corporate annual report.
C)  greatly increased the number of U.S.firms that are going public for the first time.
D)  decreased the number of U.S.firms going public on foreign exchanges.
E)  essentially made officers of publicly traded firms personally responsible for the firm's financial statements.F) A) and D)
G) A) and B)

Question 11

Capital budgeting includes the evaluation of which of the following?

Accepted Answer

A)  Size of future cash flows only
B)  Size and timing of future cash flows only
C)  Timing and risk of future cash flows only
D)  Risk and size of future cash flows only
E)  Size, timing, and risk of future cash flowsF) A) and E)
G) B) and E)

Question 12

An employee has a claim on the cash flows of Martin's Machines.This claim is defined as a claim by one of the firm's:

Accepted Answer

A)  residual owners.
B)  shareholders.
C)  financiers.
D)  provisional partners.
E)  stakeholders.F) A) and C)
G) B) and C)

Question 13

The primary goal of financial management is to maximize:

Accepted Answer

A)  current profits.
B)  market share.
C)  current dividends.
D)  the market value of existing stock.
E)  revenue growth.F) B) and C)
G) A) and E)

Question 14

Which one of the following is contained in the corporate bylaws?

Accepted Answer

A)  Procedures for electing corporate directors
B)  State of incorporation
C)  Number of authorized shares
D)  Intended life of the corporation
E)  Business purpose of the corporationF) A) and C)
G) D) and E)

Question 15

A corporation:

Accepted Answer

A)  is ultimately controlled by its board of directors.
B)  is a legal entity separate from its owners.
C)  is prohibited from entering into contractual agreements.
D)  has its identity defined by its bylaws.
E)  has its existence regulated by the rules set forth in its charter.F) C) and E)
G) A) and B)

Question 16

One example of a primary market transaction would be the:

Accepted Answer

A)  sale of 100 shares of stock by Maria to her best friend.
B)  purchase by Theo of 5,000 shares of stock from his father.
C)  sale of 1,000 shares of newly issued stock by Alt Company to Miquel.
D)  sale by Terry of 50,000 shares of stock to his brother.
E)  sale of 5,000 shares of stock owned by a corporate CEO to his son.F) B) and E)
G) C) and D)

Question 17

Matt and Alicia created a firm that is a separate legal entity and will share ownership of that firm on a 75/25 basis.Which type of entity did they create if they have no personal liability for the firm's debts?

Accepted Answer

A)  Limited partnership
B)  Corporation
C)  Sole proprietorship
D)  General partnership
E)  Public companyF) B) and C)
G) C) and E)

Question 18

The primary goal of financial management is most associated with increasing the:

Accepted Answer

A)  dollar amount of each sale.
B)  traffic flow within the firm's stores.
C)  the fixed costs while lowering the variable costs.
D)  firm's liquidity.
E)  market value of the firm.F) B) and C)
G) B) and D)

Exam 1: Introduction to Financial Management

Matt and Alicia created a firm that is a separate legal entity and will share ownership of that firm on a 75/25 basis.Which type of entity did they create if they have no personal liability for the firm's debts?

Correct Answer
verified

Capital budgeting includes the evaluation of which of the following?

Correct Answer
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The primary goal of financial management is most associated with increasing the:

Correct Answer
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The primary goal of financial management is to maximize:

Correct Answer
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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:

Correct Answer
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An employee has a claim on the cash flows of Martin's Machines.This claim is defined as a claim by one of the firm's:

Correct Answer
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Which one of the following is a capital structure decision?

Correct Answer
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The Sarbanes-Oxley Act of 2002 has:

Correct Answer
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A corporation:

Correct Answer
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An auction market:

Correct Answer
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The goal of financial management is to increase the:

Correct Answer
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Which one of the following statements is correct?

Correct Answer
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One advantage of the corporate form of organization is the:

Correct Answer
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Corporate shareholders:

Correct Answer
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Which one of the following is contained in the corporate bylaws?

Correct Answer
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One example of a primary market transaction would be the:

Correct Answer
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The shareholders of Weil's Markets would benefit if the firm were to be acquired by Better Foods.However,Weil's board of directors rejects the acquisition offer.This is an example of:

Correct Answer
verified

The Sarbanes-Oxley Act:

Correct Answer
verified

Exam 1: Introduction to Financial Management

Matt and Alicia created a firm that is a separate legal entity and will share ownership of that firm on a 75/25 basis.Which type of entity did they create if they have no personal liability for the firm's debts?

Correct AnswerverifiedShow Answer

Capital budgeting includes the evaluation of which of the following?

Correct AnswerverifiedShow Answer

The primary goal of financial management is most associated with increasing the:

Correct AnswerverifiedShow Answer

The primary goal of financial management is to maximize:

Correct AnswerverifiedShow Answer

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:

Correct AnswerverifiedShow Answer

An employee has a claim on the cash flows of Martin's Machines.This claim is defined as a claim by one of the firm's:

Correct AnswerverifiedShow Answer

Which one of the following is a capital structure decision?

Correct AnswerverifiedShow Answer

The Sarbanes-Oxley Act of 2002 has:

Correct AnswerverifiedShow Answer

A corporation:

Correct AnswerverifiedShow Answer

An auction market:

Correct AnswerverifiedShow Answer

The goal of financial management is to increase the:

Correct AnswerverifiedShow Answer

Which one of the following statements is correct?

Correct AnswerverifiedShow Answer

One advantage of the corporate form of organization is the:

Correct AnswerverifiedShow Answer

Corporate shareholders:

Correct AnswerverifiedShow Answer

Which one of the following is contained in the corporate bylaws?

Correct AnswerverifiedShow Answer

One example of a primary market transaction would be the:

Correct AnswerverifiedShow Answer

The shareholders of Weil's Markets would benefit if the firm were to be acquired by Better Foods.However,Weil's board of directors rejects the acquisition offer.This is an example of:

Correct AnswerverifiedShow Answer

The Sarbanes-Oxley Act:

Correct AnswerverifiedShow Answer

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