Fin 310 Chapter 1 HW-test Questions

Your page rank:

Total word count: 837
Pages: 3

Calculate the Price

- -
275 words
Looking for Expert Opinion?
Let us have a look at your work and suggest how to improve it!
Get a Consultant

Jamie is employed as a commercial loan officer for a regional bank centered in the Midwestern section of the U.S. Her job falls into which one of the following areas of finance?

Financial institutions

Which one of the following is a working capital decision?

How much cash should the firm keep in reserve?

Which one of the following is an advantage of being a limited partner?

Losses limited to capital invested

Limited liability companies are primarily designed to:

provide limited liability while avoiding double taxation.

Which of the following are advantages of the corporate form of organization?

1 Ability to raise large sums of equity capital
2 Ease of ownership transfer
3 Profits taxed at the corporate level
4 Limited liability for all owners

1, 2 and 4

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

Increasing the market value of firm

Which one of the following best describes the primary intent of the Sarbanes-Oxley Act of 2002?

Increase protection against corporate fraud

Which one of the following is most apt to align management’s priorities with shareholders’ interests?

Compensating managers with shares of stock that must be held for 3 years before the shares can be sold

Which of the following are potential ways to align management goals with shareholder interests?

1 Employee stock options
2 Threat of a takeover
3 Management bonuses tied to performance goals
4 Threat of a proxy fight

All

Which one of the following statements is correct?

All secondary markets are dealer markets.
All secondary markets are broker markets.
All stock trades between existing shareholders are secondary market transactions.
All stock transactions are secondary market transactions.
All Dutch auction sales are secondary market transactions.

All stock trades between existing shareholders are secondary market transactions.

Choose the type of financial management decision that is relevant to each.

Deciding whether to expand a manufacturing plant [x]
Deciding whether to issue new equity and use the proceeds to retire outstanding debt [y]
Modifying the firm’s credit collection policy with its customers [z]

X: Capital Budgeting Y: Capital structure Z: Working capital management

What goal should always motivate the actions of the firm’s financial manager?

Current market value(share price) of the equity

Who owns a corporation? Describe the process whereby the owners control the firm’s management. What is the main reason that an agency relationship exists in the corporate form of organization? In this context, what kinds of problems can arise?

In the corporate form of ownership, the SHAREHOLDERS are the owners of the firm. The SHAREHOLDERS elect the BOARD OF DIRECTORS of the corporations, who in turn appoint the firm’s MANAGEMENT. This separation of ownership from control in the corporate form of organization is what causes agency problems to exist. Management may act in its own or someone else’s best interests, rather than those of the SHAREHOLDERS. If such events occur, they may contradict the goal of maximizing the share price of the equity of the firm.

You’ve probably noticed coverage in the financial press of an initial public offering (IPO) of a company’s securities. Web search company Google is a relatively recent example. IPO is a [x]

primary market transaction

What does it mean when we say the New York Stock Exchange is an auction market? How are auction markets different from dealer markets? What kind of market is NASDAQ?

In auction markets like the NYSE, BROKERS AND AGENTS meet at a physical location to buy and sell their assets. Markets like Nasdaq represent DEALERS operating in dispersed locales who buy and sell assets themselves, usually communicating with other dealers electronically or literally over the counter.

Primary Market and examples

Corporation is the seller and transactions raises money for the corporation. Public offerings and private placements.

Secondary Market and examples

Involves one owner or creditor selling to another. Usually the ones that provides the means for a transfering ownership of corporate securities.

Which of the following statements about the corporate form of ownership is FALSE?

a) The shareholders of are the owners of the firm and hold top priority claim among all stakeholders
b) the shareholders elect the directors of the corporation
c) The directors appoint the firm’s management and yet managers usually participate in nominating new candidate for directors.
D) seperation of ownership from control can cause AGENCY problems where managers act in their own interests, rather than the shareholders

a) The shareholders of are the owners of the firm and hold top priority claim among all stakeholders

Which of the following statements about the corporate form of ownership is FALSE?
A. The shareholders are the owners of the firm and hold the top priority claim among all stakeholders.
B. The shareholders elect the directors of the corporation, usually in uncontested elections.
C. The directors appoint the firm’s management, and yet managers usually participate in nominating
new candidates for directors.
D. Separation of ownership from control can cause agency problems where managers act in their own
interests, rather than shareholders’ interests.

A. The shareholders are the owners of the firm and hold the top priority claim among all stakeholders.

Share This
Flashcard

More flashcards like this

NCLEX 10000 Integumentary Disorders

When assessing a client with partial-thickness burns over 60% of the body, which finding should the nurse report immediately? a) ...

Read more

NCLEX 300-NEURO

A client with amyotrophic lateral sclerosis (ALS) tells the nurse, "Sometimes I feel so frustrated. I can’t do anything without ...

Read more

NASM Flashcards

Which of the following is the process of getting oxygen from the environment to the tissues of the body? Diffusion ...

Read more

Unfinished tasks keep piling up?

Let us complete them for you. Quickly and professionally.

Check Price

Successful message
sending