Finance - Q1

The over-the-counter market is

• the New York Stock Exchange.

• an organised stock exchange.

• a place where securities are bought and sold.

• an intangible market for unlisted securities.

The wealth of the owners of a corporation is represented by

• profits

• earnings per share

• share price

• cash flow

A major weakness of a partnership is

• limited liability.

• difficulty liquidating or transferring ownership.

• access to capital markets.

• low organizational costs.

Which of the following legal forms of organization is most expensive to organize?

• Sole proprietorships.

• Partnerships.

• Corporations.

• Limited partnerships.

The financial manager is interested in the cash inflows and outflows of the firm, rather than the accounting data, in order to ensure:

• profitability.

• the ability to pay dividends.

• the ability to acquire new assets.

• solvency.

The two key financial markets are

• primary market and secondary market.

• money market and capital market.

• primary market and money market.

• capital market and secondary market.

The conflict between the goals of a firm’s owners and the goals of its non-owner managers is

• the agency problem.

• incompatibility.

• serious only when profits decline.

• of little importance in most large U.S. firms.

Primary and secondary markets are

• markets for short-term and long-term securities, respectively.

• markets for initial public offerings and resale, respectively.

• markets for institutions and individuals, respectively.

• markets for corporations and sole proprietorships, respectively.

All of the following are examples of organized stock exchanges EXCEPT

• the New York Stock Exchange.

• the American Stock Exchange.

• the Pacific Stock Exchange.

• the over-the-counter exchange.

Most money market transactions are made in:

• common stock.

• marketable securities.

• stocks and bonds.

• preferred stock.