any person or entity other than a stockholder or creditor who potentially has a claim on the cash flows of a firm.

a person who owns shares of stock.

any person who has voting rights based on stock ownership of a corporation.

a person who initially founded a firm and currently has management control over that firm.

a creditor to whom a firm currently owes money.

Which one of the following correctly defines the upward chain of command in a typical corporate organizational structure?

The treasurer reports to the vice president of finance.

The vice president of finance reports to the chairman of the board.

The chief executive officer reports to president.

The controller reports to the president.

The chief operations officer reports to the vice president of production.

Which one of the following is a capital budgeting decision?

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

determining how many shares of stock to issue

deciding how to refinance a debt issue that is maturing

determining how much inventory to keep on hand

determining how much money should be kept in the checking account

Which one of the following is a capital structure decision?

determining how much debt should be assumed to fund a project

determining which one of two projects to accept

determining how to allocate investment funds to multiple projects

determining the amount of funds needed to finance customer purchases of a new product

determining how much inventory will be needed to support a project

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

determining whether to pay cash for a purchase or use the credit offered by the supplier

determining the amount of equipment needed to complete a job

determining the amount of long-term debt required to complete a project

determining the number of shares of stock to issue to fund an acquisition

determining whether or not a project should be accepted

Which one of the following statements concerning a sole proprietorship is correct?

The owner of a sole proprietorship is personally responsible for all of the company's debts.

A sole proprietorship is designed to protect the personal assets of the owner.

The profits of a sole proprietorship are subject to double taxation.

There are very few sole proprietorships remaining in the U.S. today.

A sole proprietorship is structured the same as a limited liability company.

Which one of the following statements concerning a sole proprietorship is correct?

It is easy to create a sole proprietorship.

The life of a sole proprietorship is potentially unlimited.

A sole proprietor can generally raise large sums of capital quite easily.

Transferring ownership of a sole proprietorship is easier than transferring ownership of a corporation.

A sole proprietorship is taxed the same as a C corporation.

Which one of the following best describes the primary advantage of being a limited partner instead of a general partner?

maximum loss limited to the capital invested

active participation in the firm's activities

greater control over the business affairs of the partnership

is solely responsible for all the partnership debts.

has no say over a firm's daily operations.

faces double taxation whereas a limited partner does not.

has a maximum loss equal to his or her equity investment.

receives a salary in lieu of a portion of the profits.

A limited partnership:

has a greater ability to raise capital than a sole proprietorship.

can opt to be taxed as a corporation.

terminates at the death of any limited partner.

consists solely of limited partners.

Which one of the following statements is correct?

Corporations can raise large amounts of capital generally easier than partnerships can.

The majority of firms in the U.S. are structured as corporations.

Corporate profits are taxable income to the shareholders when earned.

Stockholders face no potential losses related to their corporate investment.

Corporate shareholders elect the corporate president.

Which one of the following statements is correct?

Both sole proprietorship and partnership income is taxed as individual income.

A general partnership is legally the same as a corporation.

Partnerships are the most complicated type of business to form.

All business organizations have bylaws.

Only firms organized as sole proprietorships have limited lives.

determine how a corporation regulates itself.

must be amended should a firm decide to increase the number of shares authorized.

cannot be amended once adopted.

define the name by which the firm will operate.

describe the intended life and purpose of the organization.

Which one of the following characteristics applies to a limited liability company?

taxed similar to a C corporation

available only to firms having a single owner

limited liability for limited partners only

all income generated is totally tax-free

Which one of the following best states the primary goal of financial management?

maximize the current value per share

maximize current dividends per share

increase cash flow and avoid financial distress

minimize operational costs while maximizing firm efficiency

maintain steady growth while increasing current profits

Which one of the following best illustrates that the management of a firm is adhering to the goal of financial management?

increase in the market value per share

increase in the amount of the quarterly dividend

decrease in the per unit production costs

increase in the number of shares outstanding

decrease in the net working capital

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

because they have been hired to represent the interests of the current shareholders

doing so guarantees the company will grow in size at the maximum possible rate

doing so increases employee salaries

because this will increase the current dividends per share

because managers often receive shares of stock as part of their compensation

Decisions made by financial managers should primarily focus on increasing which one of the following?

market value per share of outstanding stock

The Sarbanes-Oxley Act of 2002 is a governmental response to:

the terrorists attacks on 9/11/2001.

deregulation of the stock exchanges.

Which one of the following is an unintended result of the Sarbanes-Oxley Act?

corporations delisting from major exchanges

more detailed and accurate financial reporting

increased management awareness of internal controls

increased responsibility for corporate officers

identification of internal control weaknesses

A firm which opts to "go dark" in response to the Sarbanes-Oxley Act:

can provide less information to its shareholders than it did prior to "going dark".

must continue to provide audited financial statements to the public.

must continue to provide a detailed list of internal control deficiencies on an annual basis.

can continue publicly trading its stock but only on the exchange on which it was previously listed.

Which one of the following actions by a financial manager is most apt to create an agency problem?

increasing current profits when doing so lowers the value of the firm's equity

refusing to borrow money when doing so will create losses for the firm

refusing to lower selling prices if doing so will reduce the net profits

refusing to expand the company if doing so will lower the value of the equity

agreeing to pay bonuses based on the market value of the company stock rather than on the firm's level of sales

Which one of the following is an agency cost?

hiring outside accountants to audit the company's financial statements

accepting an investment opportunity that will add value to the firm

increasing the quarterly dividend

investing in a new project that creates firm value

closing a division of the firm that is operating at a loss

Which one of the following is least likely to be an agency problem?

increasing the market value of the firm's shares

concentrating on maximizing current profits

closing a division with net losses

obtaining a patent for a new product

Corporate Finance Quiz

Authored by TRINH THAO

English

University

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63 questions

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MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which one of the following terms is defined as the management of a firm's long-term investments?

working capital management

financial allocation

agency cost analysis

capital budgeting

capital structure

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which one of the following terms is defined as the mixture of a firm's debt and equity financing?

working capital management

cash management

cost analysis

capital budgeting

capital structure

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which one of the following is defined as a firm's short-term assets and its short-term liabilities?

working capital

debt

investment capital

net capital

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

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

corporation.

sole proprietorship.

general partnership.

limited partnership.

limited liability company.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

A business formed by two or more individuals who each have unlimited liability for all of the firm's business debts is called a:

corporation.

sole proprietorship.

general partnership.

limited partnership.

limited liability company.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

A business partner whose potential financial loss in the partnership will not exceed his or her investment in that partnership is called a:

generally partner.

sole proprietor.

limited partner.

corporate shareholder.

zero partner.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

A business created as a distinct legal entity and treated as a legal 'person' is called a:

corporation.

sole proprietorship.

general partnership.

limited partnership.

unlimited liability company.

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Corporate Finance Quiz

Which one of the following terms is defined as the management of a firm's long-term investments?

Which one of the following terms is defined as the mixture of a firm's debt and equity financing?

Which one of the following is defined as a firm's short-term assets and its short-term liabilities?

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

A business formed by two or more individuals who each have unlimited liability for all of the firm's business debts is called a:

A business partner whose potential financial loss in the partnership will not exceed his or her investment in that partnership is called a:

A business created as a distinct legal entity and treated as a legal 'person' is called a:

Which one of the following terms is defined as a conflict of interest between the corporate shareholders and the corporate managers?

A stakeholder is:

Which of the following questions are addressed by financial managers?

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