1. Tim has been promoted and is now in charge of all fixed asset purchases. In other words, Tim is in charge of: A. capital structure management |
D, capital budgeting |
2. Stadford Inc. is financed with 40 percent debt and 60 percent equity. This mixture of debt and equity is referred to as the firm's: A. capital structure |
A, capital structure |
Lester's BBQ has $121,000 in current assets and $109,000 in current liabilities. These values as referred to as the firm's: A. capital structure |
C, working capital |
Margie opened a used bookstore and is both the 100 percent owner and the store's manager. Which type of business entity does Margie own if she is personally liable for all the store's debts? A. sole proprietorship |
A, sole proprietorship |
Todd and Cathy created a firm that is a separate legal entity and will share ownership of that firm on a 50-50 basis. Which type of entity did they create if they have no personal liability for the firm's debts? A. limited partnership |
B, corporation |
The potential conflict of interest between a firm's owner and its managers is referred to as which type of conflict? A. organizational |
D, agency |
The federal government has a tax claim on the cash flows of the The Window Store. This claim is defined as a claim by one of the firm's: A. residual owners |
E, stakeholders |
Which one of the following occupations best fits into the international area of finance? A. bank teller |
C, currency trader |
Which one of the following individuals commonly use finance in the course of their job? A. I and II only |
E; I, II, III and IV |
Which one of the following is a working capital decision? A. How should the firm raise additional capital to fund its expansion? |
E, How much cash should the firm keep in reserve? |
Which one of the following is a capital structure decision? A. determining the optimal inventory level |
B, establishing the preferred debt-equity level |
Working capital management includes which one of the following? A. deciding which new projects to accept |
C, determining which customers will be granted credit |
The daily financial operations of a firm are primarily controlled by managing the: A. total debt level |
B, working capital |
A sole proprietorship: A. provides limited liability for its owner |
D, has its profits taxed as personal income |
Which one of the following forms of business organization offers liability protection to some of its owners but not to all of its owners? A. sole proprietorship |
D, limited liability company |
The primary goal of financial management is to maximize which one of the following for a corporation? A. current profits |
D, market value of existing stock |
Which one of the following best match the primary goal of financial management? A. increasing the dollar amount of each sale |
E, increasing the market value of the firm |
The goal of financial management is to increase the: A. future value of the firm's total equity |
D, current market value per share |
What is the goal of financial management for a sole proprietorship? A. maximize net income given the current resources of the firm |
D, maximize the market value of the equity |
Which one of the following situations is most apt to create an agency conflict? A. compensating a manger based on his or her division's net income |
D, rejecting a profitable project to protect employee jobs |
Which one of the following is most apt to create a situation where an agency conflict could arise? A. increasing the size of a firm's operations |
C, separating management from ownership |
Which one of the following is most apt to align management's priorities with shareholders' interests? A. increasing employee retirement benefits |
B, compensating manger with shares of stock that must be held for 3 years before the shares can be sold |
Marti had an unexpected surprise when she ate her Lotsa Good cereal this morning. She found a piece of metal mixed in her cereal. The potential claim that Marti has against this firm is that of a(n): A. general creditor |
D, stakeholder |
Which one of the following transactions occurred in the primary market? A. Maria gave 100 shares of Alto stock to her best friend |
C, South Wind Products sold 1,000 shares of newly issued stock to Mike |
Valerie bought 200 shares of Able stock today. Able stock has been trading for some time on the NYSE. Valerie's purchase occurred in which market? A. dealer market |
C, secondary market |