Business Organization and Management Quiz

What are the three main forms of business organization?

• Proprietorship, Corporation, Partnership

• Limited Liability, Corporation, Partnership

• Sole Proprietorship, Franchise, Trust

• Partnership, Trust, Cooperative

What is the primary objective of management in a corporation?

• Maximize employee satisfaction

• Maximize shareholder wealth

• Expand business operations globally

• Reduce environmental impact

Free cash flows (FCFs) are:

• Cash flows available after paying taxes.

• Cash flows available for distribution to all investors after expenses and investments.

• Cash flows used only for operational investments.

• Extra cash flows kept in reserve.

What is the weighted average cost of capital (WACC)?

• The return required by only shareholders.

• The average return required by all investors.

• The total profits divided by equity.

• The average debt-to-equity ratio.

What determines the intrinsic value of a firm?

• Market share and operational costs

• Free cash flows and WACC

• Debt levels and shareholder equity

• Current stock price and dividends

Capital allocation occurs through which methods?

• Direct transfers, investment banks, financial intermediaries

• Government subsidies, loans, investments

• Internal funding, joint ventures, collaborations

• Banking systems, credit unions, microfinance

How do corporations typically fund growth after exhausting personal resources?

• Venture capital, angel investors, IPOs

• Selling assets, cutting costs, raising debt

• Expanding operations, partnerships, tax incentives

• Licensing, franchising, internal savings

Which financial market deals with securities that mature in less than one year?

• Capital market

• Money market

• Derivatives market

• Secondary market

What type of market involves buying and selling securities for immediate delivery?

• Futures market

• Primary market

• Spot market

• Over-the-counter market

Which factors primarily affect the cost of money?

• Inflation, risk, time preferences for consumption, production opportunities

• Supply chain, demand, tax policies, economic policies

• Technological advances, global trade, debt structures, taxation

• Currency exchange, government bonds, interest rates, inflation