Corporate Finance

A business owned by a solitary individual who has unlimited liability for its debt is called a

• Sole proprietorship

• Limited liability company

• General partnership

• Corporation

Which one of the following parties has ultimate control of a corporation ?

• Board of Direction

• Shareholder

• Chief executive of officer

• Chairman of the Board

Working capital management ?

• Is concerned with having sufficient funds to operate the business on a daily basis

• Ensures that sufficient equipment is available to produce the amount of product desired on a daily basis.

• Ensures that the dividends are paid to all stockholders on an annual basis

• Ensure that long term debt is acquired at the lowest possible cost

Which of the following is not one of a financial manager's primary activities?:

• Management of the firm's asset structure

• The design and delivery of banking advice and products

• Financial analysis and planning

• Managing the firm's financial structure

Why should financial managers strive to maximize the current value per share of the existing stock?

• Because this will increase the current dividends per share

• Because managers often receive shares of stock as part of their compensation

• Doing so increases employee salaries

• Because they have been hired to represent the interests of the current shareholders

Which one of the following is a capital budgeting decision?

• Deciding how to refinance a debt issue that is maturing

• Deciding how much inventory should kept on hand

• Determine how many shares of stock to issue

• Deciding whether or not to purchase a new machine for the production line

When considering a capital budgeting project the financial manager should consider the:

I. Size of the project

II. Timing of the projec's cash flow

III. Risk associated with the project's cash flows

• II and III only

• I and III only

• I only

• I, II, and III

The agency problem will occur in a business if the goal of......is not in line with......

• employees, managers

• managers, the government

• managers, shareholders

• shareholders, the public

The concept of compound interest refers to:

• Receiving interest more than once a year

• Earning interest on a single deposit from more than one source

• Earning a rate of interest of 10% or higher

• Adding interest to the principal at the end of a specified period

Which one of the following is a working capital management decision?

• Determining whether or not a project should be accepted

• Determining the amount of equipment needed to complete a job

• Determining whether to pay cash for a purchase of use the credit offered by the supplier

• Determining the number of shares of stock to issue to fund an acquisition