topic 1 CFM

Which financial management decision answers this question:

What long-term investments should the firm take on?

• capital structure

• capital budgeting

• working capital management

Which financial management decision answers this question:

Where will we get the long-term financing to pay for the investment?

• working capital management

• capital budgeting

• capital structure

Which financial management decision answers this question:

How will we manage the everyday financial activities of the firm?

• working capital management

• capital structure

• capital budgeting

Who overseas cash management, credit management, capital expenditures, and financial planning?

• Controller

• Treasurer

Which is NOT an advantage of sole proprietorship?

• Easiest to start

• least regulated

• single owner

• limited liability

Which is NOT an advantage of corporation?

• limited liability

• unlimited life

• relatively easy to start

• easier to raise capital

Relationship between principal and an agent is called

• agency problem

• agency relationship

• agent cost

original sale of securities by government and corporate takes place in __________

• secondary market

• primary market

• corporate control

• managerial compensation

Which is NOT the three forms of business organization?

• controller

• sole proprietorship

• partnership

• corporation

Double taxation is a disadvantage of which type of organization?

• corporation

• partnership

• sole proprietorship