Chpt 1

(1.1) Capital budgeting is concerned with

• Long term assets

• Financing

• Short term assets & short term liabilities

(1.1) Working capital management is concerned with

• Long term assets

• Financing

• Short term assets & short term liabilities

(1.1) Inventory is

• Long term asset

• Long term liability

• Short term asset

• short term liability

(1.2) A sole proprietorship has

• Limited liability

• Unlimited liability

• Depends on the size

(1.2) Who owns a corporation

• Managers

• Stockholders

• Both

• Neither

(1.2) Who runs a corporation

• Managers

• Stockholders

• Both

• Neither

(1.2) What are the benefits of a corporation

• Limited liability

• Ease of ownership transfer

• Unlimited life

• All of the above

(1.3) The primary role of the financial manager in a publicly traded company is to

• Maximise profits

• Minimise losses

• Maximise the current stock price

• Avoid bankruptcy

(1.3) The main aim of Sarbanes-Oxley is to

• Protect managers

• Protect stock holders

• Protect suppliers

• Protect distributors

(1.4) What is a solution to an agency problem (principal/agent)

• Fire the principal

• Fire the agent

• Incentivize the principal

• Incentivize the agent