FIN340 Quiz #1

Which of the following statements is correct? Assume everything else equal.

• Riskier assets always

  have higher market values.

• Riskier assets are

  more valuable than (preferred to) less risky assets.

• The sooner cash is

  received, the more valuable it is.

• Investors generally

  prefer short-term, high-risk assets investments.

• Investors generally receive higher returns on investments with low risk than investments with high risk.

The success of financial institutions depends on _____.

• the understanding of the factors that cause interest rates and other returns in the financial markets to rise and fall

• the environmentally responsible behavior of the shareholders of corporations

• the expectations of long-term investors in the company

• the prior knowledge of the decisions that public corporations make concerning their cash flows

• the awareness of the shareholders regarding the regulations that affect public corporations

The investment function of finance helps in _____.

• making decisions regarding the dividends paid by a corporation

• determining the values, risks, and returns associated with such financial assets as stocks and bonds

• determining the expenses to be incurred to ensure that the behavior of an investment corporation is socially acceptable

• ensuring that the corporations payout maximum dividends per share

• ensuring that 50 percent of all investments in a portfolio are in environment-friendly corporations

The treasurer of a company is a key subordinate of the _____.

• financial vice president

• controller

• director of capital budgeting

• credit manager

• chief executive officer

Everything else equal, including firm size, dollar sales, type of product sold, and so forth, the primary difference between proprietorship and partnership business forms is that _____.

• a partnership has more owners than a proprietorship

• the combined personal

  liability associated with a partnership is significantly less than the

  combined personal liability associated with a proprietorship

• a partnership is generally easier to form than a proprietorship

• many more businesses are formed as partnerships than proprietorships

• the annual growth rate of a proprietorship is limited by law, whereas the growth rate of a partnership is always potentially unlimited