The person generally directly responsible for overseeing the tax management, cost
accounting, financial accounting, and data processing functions is the:
a. treasurer.
b. director.
c. controller.
d. chairman of the board.
e. chief executive officer.
Controller
The person generally directly responsible for overseeing the cash and credit functions,
financial planning, and capital expenditures is the:
a. treasurer.
b. director.
c. controller.
d. chairman of the board.
e. chief operations officer.
Treasurer
The process of identifying projects which will produce positive cash flows is called:
a. working capital management.
b. financial depreciation.
c. agency cost analysis.
d. capital budgeting.
e. capital structure
Capital Budgeting
The mix of debt and equity capital for a firm is referred to as the firm's:
a. working capital management.
b. cash management.
c. cost analysis.
d. capital budgeting.
e. capital structure
Capital Structure
The management of a firm's short-term assets and liabilities is called:
a. working capital management.
b. debt management.
c. equity management.
d. capital budgeting.
e. capital structure
Working Capital Management
A business owned by a solitary individual is called a:
a. corporation.
b. sole proprietorship.
c. general partnership.
d. limited partnership.
e. limited liability company
Sole Propriertorship
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. corporation.
b. sole proprietorship.
c. general partnership.
d. limited partnership.
e. limited liability company
General Partnership
The division of profits and losses among the members of a partnership is formalized in
the:
a. indemnity clause.
b. indenture contract.
c. statement of purpose.
d. partnership agreement.
e. group charter.
Partnership Agreement
A business partner whose potential financial loss in the firm will not exceed his or her
investment is called a:
a. generally partner.
b. sole proprietor.
c. limited partner.
d. corporate partner.
e. zero partner
Limited Partner
A business created as a distinct legal entity composed of one or more individuals or
entities is called a:
a. corporation.
b. sole proprietorship.
c. general partnership.
d. limited partnership.
e. unlimited liability company.
Corporation
The business purpose and intended life of a corporation are set forth in the:
a. indenture agreement.
b. tax agreement.
c. corporate bylaws.
d. corporate charter.
e. articles of incorporation
Articles of Incorporation
The rules governing the method of electing corporate directors are called:
a. indenture provisions.
b. indemnity provisions.
c. charter agreements.
d. bylaws.
e. articles of incorporation
Bylaws
A business entity which taxes it owners like partners while providing those owners with
limited liability is called a:
a. limited liability company.
b. general partnership.
c. limited proprietorship.
d. sole proprietorship.
e. corporation
Limited Liability Company
A conflict of interest between the stockholders and company management is called:
a. stockholders' liability.
b. corporate breakdown.
c. the agency problem.
d. corporate activism.
e. legal liability
The agency Problem
Agency costs refer to:
a. the total dividends paid to stockholders over the lifetime of a firm.
b. the costs that result from default and bankruptcy of a firm.
c. corporate income subject to double taxation.
d. the costs of any conflicts of interest betwe
The costs of any conflicts of interest between stockholders and management
A stakeholder is:
a. any person or entity that owns shares of stock of a corporation.
b. any person or entity that has voting rights based on stock ownership of a corporation.
c. a person who initially started a firm and currently has management control o
any person or entity other than a stockholder or creditor who potentially has a claim on cash flows of the firm
The primary market is the market in which:
a. trades occur on the floor of the NYSE only.
b. shareholders who are also company officers offer their securities for sale.
c. newly issued securities are offered for sale.
d. all securities which are included
Newly issued securities are offered for sale
The secondary market is the market in which:
a. the sale proceeds of a trade flow to the issuer of the security.
b. one shareholder sells securities to another shareholder.
c. publicly held firms issue new shares of stock.
d. only bonds or other debt secu
One shareholder sells securities to another stareholder
A secondary market where an individual or entity buys and sells for themselves at their
own risk is called a _____ market.
a. primary
b. secondary
c. dealer
d. auction
e. liquidation
Dealer
A market where brokers and agents match buyers with sellers is called a(n):
a. primary market.
b. OTC market.
c. dealer market.
d. auction market.
e. liquidation market
Auction Market
Which of the following questions are addressed by financial managers?
I. How long will it take to produce a product?
II. Should customers be given 30 or 45 days to pay for their credit purchases?
III. Should the firm borrow more money?
IV. Should the firm
II,III,IV
The treasurer of a corporation generally reports to the:
a. controller.
b. chairman of the board.
c. chief executive officer.
d. president.
e. vice president of finance.
Vice President of Finance
Which one of the following correctly defines the chain of command in a typical
corporate organizational structure?
a. The vice president of finance reports to the chairman of the board.
b. The chief executive officer reports to the board of directors.
c.
The chief executive officer reports to the board of directors
Which one of the following is a capital budgeting decision?
a. determining how much debt should be borrowed from a particular lender
b. deciding whether or not to open a new store
c. deciding when to repay a long-term debt
d. determining how much inventor
Deciding whether or not to open a store
When considering a capital budgeting project the financial manager should consider the:
I. size of the project.
II. timing of the project's cash flows.
III. risk associated with the project's cash flows.
a. I only
b. II only
c. I and III only
d. II and II
I,II,III
Capital structure decisions include which of the following?
a. determining the number of shares of stock to issue
b. determining whether the firm should purchase or lease some equipment
c. allocating funds to the various divisions within the firm
d. evalu
Determing the number of shares of stock to issue
The decision to issue debt rather than additional shares of stock is an example of:
a. working capital management.
b. a net working capital decision.
c. capital budgeting.
d. a controller's duties.
e. the capital structure decision
The capital structure decision
Working capital management includes decisions concerning which of the following?
I. accounts payable
II. long-term debt
III. accounts receivable
IV. inventory
a. I and II only
b. I and III only
c. II and IV only
d. I, II, and III only
E. I, III, and IV on
I,III,IV
Working capital management:
a. ensures that sufficient equipment is available to produce the amount of product desired on
a daily basis.
b. ensures that long-term debt is acquired at the lowest possible cost.
c. ensures that dividends are paid to all stoc
Is concerned with having sufficient funds to operate the business on a daily basis
Which one of the following statements concerning a sole proprietorship is correct?
a. A sole proprietorship is designed to protect the personal assets of the owner.
b. The profits of a sole proprietorship are taxed twice.
c. The owners of a sole proprieto
The owner of the sole proprietorship may be forced to sell his or her personal assets to pay company debts
Which one of the following statements concerning a sole proprietorship is correct?
a. The life of a sole proprietorship is limited to the life span of the owner.
b. A sole proprietor can generally raise large sums of capital quite easily.
c. The ownership
The life of a sole propriertorship is limited to the life span of the owner
Which one of the following best describes the primary advantage of being a limited
partner rather than a general partner?
a. entitlement to a larger portion of the partnership's income
b. ability to manage the day-to-day affairs of the business
c. no pote
Liability for firm debts is limited to the capital invested
A general partner:
a. has less legal liability than a limited partner.
b. has more management responsibility than a limited partner.
c. faces double taxation whereas a limited partner does not.
d. cannot lose more than the amount he or she invested in the
Has more management responsibility than a limited partner
A partnership:
a. is taxed the same as a corporation.
b. agreement defines whether the business income will be taxed like a partnership or a
corporation.
c. terminates at the death of any general partner.
d. has less of an ability to raise capital than a
A partnership terminates at the death of any general partner
Which of the following are disadvantages of a partnership?
I. limited life of the firm
II. personal liability for firm debt
III. greater ability to raise capital than a sole proprietorship
IV. lack of ability to transfer partnership interest
a. I and II o
I,II,IV
Which of the following are advantages of the corporate form of business ownership?
I. limited liability for firm debt
II. double taxation
III. ability to raise capital
IV. unlimited firm life
a. I and II only
b. III and IV only
c. I, II, and III only
d. I
I,III,IV
Which one of the following statements is correct concerning corporations?
a. The largest firms are usually corporations.
b. The majority of firms are corporations.
c. The stockholders are usually the managers of a corporation.
d. The ability of a corporat
The largest firms are usually corps
Which one of the following statements is correct?
a. Both partnerships and corporations incur double taxation.
b. Both sole proprietorships and partnerships are taxed in a similar fashion.
c. Partnerships are the most complicated type of business to form.
Both sole proprietorships and partnerships are taxed in the same way
The articles of incorporation:
a. can be used to remove company management.
b. are amended annually by the company stockholders.
c. set forth the number of shares of stock that can be issued.
d. set forth the rules by which a corporation regulates its exi
Set forth the number of shares of stock that can be issued
The bylaws:
a. establish the name of a corporation.
b. are rules which apply only to limited liability companies.
c. set forth the purpose of a firm.
d. mandate the procedure for electing corporate directors.
e. set forth the procedure by which the stockh
Mandate the procedure for electing corporate directors
The owners of a limited liability company prefer:
a. being taxed like a corporation.
b. having liability exposure similar to that of a sole proprietor.
c. being taxed personally on all business income.
d. having liability exposure similar to that of a gen
Being taxed personally on all business income
Which one of the following business types is best suited to raising large amounts of
capital?
a. sole proprietorship
b. limited liability company
c. corporation
d. general partnership
e. limited partnership
Corporation
Which type of business organization has all the respective rights and privileges of a legal
person?
a. sole proprietorship
b. general partnership
c. limited partnership
d. corporation
e. limited liability company
Corporation
The primary goal of financial management is to:
a. maximize current dividends per share of the existing stock.
b. maximize the current value per share of the existing stock.
c. avoid financial distress.
d. minimize operational costs and maximize firm effi
Maximize the current VAlue per share of the existing stock
Financial managers should strive to maximize the current value per share of the
existing stock because:
a. doing so guarantees the company will grow in size at the maximum possible rate.
b. doing so increases the salaries of all the employees.
c. they hav
They have been hired for the purpose of representing the interest of the current shareholder
The decisions made by financial managers should all be ones which increase the:
a. size of the firm.
b. growth rate of the firm.
c. marketability of the managers.
d. market value of the existing owners' equity.
e. financial distress of the firm.
Market value of the existing owner's equity
The Sarbanes-Oxley Act of 2002 is a governmental response to:
a. increased federal taxes.
b. the terrorists attacks on 9/11/2001.
c. decreasing corporate dividend payments.
d. new stock trading regulations by the stock exchanges.
e. corporate scandals
Corporate Scandals
The Sarbanes-Oxley Act of 2002:
a. imposed insignificant compliance costs on smaller corporations.
b. caused some firms to "go dark".
c. increases the ability of corporate officers to borrow money from their employer.
d. required that the smaller firms on
Caused some firms to go dark
A firm which opts to "go dark" in response to the Sarbanes-Oxley Act:
a. must continue to provide audited financial statements which have been signed by the
corporate officers.
b. must continue to provide a detailed list of internal control deficiencies o
Can and most likely will provide less infor to its shareholder than it did before
Which one of the following actions by a financial manager creates an agency problem?
a. refusing to borrow money when doing so will create losses for the firm
b. refusing to lower selling prices if doing so will reduce the net profits
c. agreeing to expan
Agreeing to expand the company at the expense of the stockholder's value
Which of the following help convince managers to work in the best interest of the
stockholders?
I. compensation based on the value of the stock
II. stock option plans
III. threat of a company takeover
IV. threat of a proxy fight
a. I and II only
b. III an
I,II,III,IV
Which of the following are agency costs?
I. forgoing an investment opportunity which would add to the market value of the
owner's equity
II. paying a dividend to each of the existing shareholders
III. purchasing new equipment which increases the value of
I,IV
Which of the following represent cash outflows from a firm?
I. issuance of securities
II. payment of dividends
III. new loan proceeds
IV. payment of government taxes
a. I and III only
B. II and IV only
c. I and IV only
d. I, II, and IV only
e. II, III, an
II,IV
Which one of the following parties is considered a stakeholder of a firm?
a. employee
b. short-term creditor
c. long-term creditor
d. preferred stockholder
e. common stockholder
Employee
Which of the following represent means by which cash flows from a corporation back
into the financial markets?
I. repayment of long-term debt
II. payment of government taxes
III. payment of loan interest
IV. sale of corporate stock
a. I and II only
B. I a
I,III
Which one of the following is a primary market transaction?
a. a dealer selling shares of stock to an individual investor
b. a dealer buying newly issued shares of stock from a corporation
c. an individual investor selling shares of stock to another indiv
A dealer buying newly issued shares of stock from a corporation
he transfer of ownership of outstanding shares of a NYSE listed stock:
a. takes place in the primary market.
b. occurs in a dealer market.
c. is facilitated in the secondary markets.
d. creates an immediate tax liability for both the seller and the buyer.
Is facilitated in the secondary market
Which of the following statements concerning auction markets is (are) correct?
I. NASDAQ is an auction market.
II. The NYSE is an auction market.
III. All trades involve a dealer in an auction market.
IV. An auction market is called an over-the-counter ma
II
Which one of the following statements concerning stock exchanges is correct?
a. The NYSE has more listed stocks than NASDAQ.
b. The NYSE is a dealer market.
c. The exchange with the strictest listing requirements is NASDAQ.
d. Some large companies are lis
Some companies are listed on NASDAQ
Dealer markets:
a. are reserved strictly for trading debt securities.
b. only exist outside of the United States.
c. are called over-the-counter markets.
d. include the American and the Pacific Stock Exchanges.
e. list only the securities of the largest f
Are called over the counter markets
Which one of the following statements is correct concerning the NYSE?
a. A firm is expected to have a market value for its publicly held shares of at least $100
million to be listed on the NYSE.
b. The NYSE is the largest dealer market for listed securiti
A first is expected to have a market value for its publicly held shares of at least 100 mil to be listed on the NYSE
Which of the following statements concerning NASDAQ are correct?
I. Most smaller firms are listed on NASDAQ rather than on the NYSE.
II. NASDAQ is an electronic market.
III. NASDAQ is an auction market.
IV. NASDAQ is an OTC market.
a. I and II only
b. I a
I,II,IV
The person generally directly responsible for overseeing the tax management, cost
accounting, financial accounting, and data processing functions is the:
a. treasurer.
b. director.
c. controller.
d. chairman of the board.
e. chief executive officer.
Controller
The person generally directly responsible for overseeing the cash and credit functions,
financial planning, and capital expenditures is the:
a. treasurer.
b. director.
c. controller.
d. chairman of the board.
e. chief operations officer.
Treasurer
The process of identifying projects which will produce positive cash flows is called:
a. working capital management.
b. financial depreciation.
c. agency cost analysis.
d. capital budgeting.
e. capital structure
Capital Budgeting
The mix of debt and equity capital for a firm is referred to as the firm's:
a. working capital management.
b. cash management.
c. cost analysis.
d. capital budgeting.
e. capital structure
Capital Structure
The management of a firm's short-term assets and liabilities is called:
a. working capital management.
b. debt management.
c. equity management.
d. capital budgeting.
e. capital structure
Working Capital Management
A business owned by a solitary individual is called a:
a. corporation.
b. sole proprietorship.
c. general partnership.
d. limited partnership.
e. limited liability company
Sole Propriertorship
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. corporation.
b. sole proprietorship.
c. general partnership.
d. limited partnership.
e. limited liability company
General Partnership
The division of profits and losses among the members of a partnership is formalized in
the:
a. indemnity clause.
b. indenture contract.
c. statement of purpose.
d. partnership agreement.
e. group charter.
Partnership Agreement
A business partner whose potential financial loss in the firm will not exceed his or her
investment is called a:
a. generally partner.
b. sole proprietor.
c. limited partner.
d. corporate partner.
e. zero partner
Limited Partner
A business created as a distinct legal entity composed of one or more individuals or
entities is called a:
a. corporation.
b. sole proprietorship.
c. general partnership.
d. limited partnership.
e. unlimited liability company.
Corporation
The business purpose and intended life of a corporation are set forth in the:
a. indenture agreement.
b. tax agreement.
c. corporate bylaws.
d. corporate charter.
e. articles of incorporation
Articles of Incorporation
The rules governing the method of electing corporate directors are called:
a. indenture provisions.
b. indemnity provisions.
c. charter agreements.
d. bylaws.
e. articles of incorporation
Bylaws
A business entity which taxes it owners like partners while providing those owners with
limited liability is called a:
a. limited liability company.
b. general partnership.
c. limited proprietorship.
d. sole proprietorship.
e. corporation
Limited Liability Company
A conflict of interest between the stockholders and company management is called:
a. stockholders' liability.
b. corporate breakdown.
c. the agency problem.
d. corporate activism.
e. legal liability
The agency Problem
Agency costs refer to:
a. the total dividends paid to stockholders over the lifetime of a firm.
b. the costs that result from default and bankruptcy of a firm.
c. corporate income subject to double taxation.
d. the costs of any conflicts of interest betwe
The costs of any conflicts of interest between stockholders and management
A stakeholder is:
a. any person or entity that owns shares of stock of a corporation.
b. any person or entity that has voting rights based on stock ownership of a corporation.
c. a person who initially started a firm and currently has management control o
any person or entity other than a stockholder or creditor who potentially has a claim on cash flows of the firm
The primary market is the market in which:
a. trades occur on the floor of the NYSE only.
b. shareholders who are also company officers offer their securities for sale.
c. newly issued securities are offered for sale.
d. all securities which are included
Newly issued securities are offered for sale
The secondary market is the market in which:
a. the sale proceeds of a trade flow to the issuer of the security.
b. one shareholder sells securities to another shareholder.
c. publicly held firms issue new shares of stock.
d. only bonds or other debt secu
One shareholder sells securities to another stareholder
A secondary market where an individual or entity buys and sells for themselves at their
own risk is called a _____ market.
a. primary
b. secondary
c. dealer
d. auction
e. liquidation
Dealer
A market where brokers and agents match buyers with sellers is called a(n):
a. primary market.
b. OTC market.
c. dealer market.
d. auction market.
e. liquidation market
Auction Market
Which of the following questions are addressed by financial managers?
I. How long will it take to produce a product?
II. Should customers be given 30 or 45 days to pay for their credit purchases?
III. Should the firm borrow more money?
IV. Should the firm
II,III,IV
The treasurer of a corporation generally reports to the:
a. controller.
b. chairman of the board.
c. chief executive officer.
d. president.
e. vice president of finance.
Vice President of Finance
Which one of the following correctly defines the chain of command in a typical
corporate organizational structure?
a. The vice president of finance reports to the chairman of the board.
b. The chief executive officer reports to the board of directors.
c.
The chief executive officer reports to the board of directors
Which one of the following is a capital budgeting decision?
a. determining how much debt should be borrowed from a particular lender
b. deciding whether or not to open a new store
c. deciding when to repay a long-term debt
d. determining how much inventor
Deciding whether or not to open a store
When considering a capital budgeting project the financial manager should consider the:
I. size of the project.
II. timing of the project's cash flows.
III. risk associated with the project's cash flows.
a. I only
b. II only
c. I and III only
d. II and II
I,II,III
Capital structure decisions include which of the following?
a. determining the number of shares of stock to issue
b. determining whether the firm should purchase or lease some equipment
c. allocating funds to the various divisions within the firm
d. evalu
Determing the number of shares of stock to issue
The decision to issue debt rather than additional shares of stock is an example of:
a. working capital management.
b. a net working capital decision.
c. capital budgeting.
d. a controller's duties.
e. the capital structure decision
The capital structure decision
Working capital management includes decisions concerning which of the following?
I. accounts payable
II. long-term debt
III. accounts receivable
IV. inventory
a. I and II only
b. I and III only
c. II and IV only
d. I, II, and III only
E. I, III, and IV on
I,III,IV
Working capital management:
a. ensures that sufficient equipment is available to produce the amount of product desired on
a daily basis.
b. ensures that long-term debt is acquired at the lowest possible cost.
c. ensures that dividends are paid to all stoc
Is concerned with having sufficient funds to operate the business on a daily basis
Which one of the following statements concerning a sole proprietorship is correct?
a. A sole proprietorship is designed to protect the personal assets of the owner.
b. The profits of a sole proprietorship are taxed twice.
c. The owners of a sole proprieto
The owner of the sole proprietorship may be forced to sell his or her personal assets to pay company debts
Which one of the following statements concerning a sole proprietorship is correct?
a. The life of a sole proprietorship is limited to the life span of the owner.
b. A sole proprietor can generally raise large sums of capital quite easily.
c. The ownership
The life of a sole propriertorship is limited to the life span of the owner
Which one of the following best describes the primary advantage of being a limited
partner rather than a general partner?
a. entitlement to a larger portion of the partnership's income
b. ability to manage the day-to-day affairs of the business
c. no pote
Liability for firm debts is limited to the capital invested
A general partner:
a. has less legal liability than a limited partner.
b. has more management responsibility than a limited partner.
c. faces double taxation whereas a limited partner does not.
d. cannot lose more than the amount he or she invested in the
Has more management responsibility than a limited partner
A partnership:
a. is taxed the same as a corporation.
b. agreement defines whether the business income will be taxed like a partnership or a
corporation.
c. terminates at the death of any general partner.
d. has less of an ability to raise capital than a
A partnership terminates at the death of any general partner
Which of the following are disadvantages of a partnership?
I. limited life of the firm
II. personal liability for firm debt
III. greater ability to raise capital than a sole proprietorship
IV. lack of ability to transfer partnership interest
a. I and II o
I,II,IV
Which of the following are advantages of the corporate form of business ownership?
I. limited liability for firm debt
II. double taxation
III. ability to raise capital
IV. unlimited firm life
a. I and II only
b. III and IV only
c. I, II, and III only
d. I
I,III,IV
Which one of the following statements is correct concerning corporations?
a. The largest firms are usually corporations.
b. The majority of firms are corporations.
c. The stockholders are usually the managers of a corporation.
d. The ability of a corporat
The largest firms are usually corps
Which one of the following statements is correct?
a. Both partnerships and corporations incur double taxation.
b. Both sole proprietorships and partnerships are taxed in a similar fashion.
c. Partnerships are the most complicated type of business to form.
Both sole proprietorships and partnerships are taxed in the same way
The articles of incorporation:
a. can be used to remove company management.
b. are amended annually by the company stockholders.
c. set forth the number of shares of stock that can be issued.
d. set forth the rules by which a corporation regulates its exi
Set forth the number of shares of stock that can be issued
The bylaws:
a. establish the name of a corporation.
b. are rules which apply only to limited liability companies.
c. set forth the purpose of a firm.
d. mandate the procedure for electing corporate directors.
e. set forth the procedure by which the stockh
Mandate the procedure for electing corporate directors
The owners of a limited liability company prefer:
a. being taxed like a corporation.
b. having liability exposure similar to that of a sole proprietor.
c. being taxed personally on all business income.
d. having liability exposure similar to that of a gen
Being taxed personally on all business income
Which one of the following business types is best suited to raising large amounts of
capital?
a. sole proprietorship
b. limited liability company
c. corporation
d. general partnership
e. limited partnership
Corporation
Which type of business organization has all the respective rights and privileges of a legal
person?
a. sole proprietorship
b. general partnership
c. limited partnership
d. corporation
e. limited liability company
Corporation
The primary goal of financial management is to:
a. maximize current dividends per share of the existing stock.
b. maximize the current value per share of the existing stock.
c. avoid financial distress.
d. minimize operational costs and maximize firm effi
Maximize the current VAlue per share of the existing stock
Financial managers should strive to maximize the current value per share of the
existing stock because:
a. doing so guarantees the company will grow in size at the maximum possible rate.
b. doing so increases the salaries of all the employees.
c. they hav
They have been hired for the purpose of representing the interest of the current shareholder
The decisions made by financial managers should all be ones which increase the:
a. size of the firm.
b. growth rate of the firm.
c. marketability of the managers.
d. market value of the existing owners' equity.
e. financial distress of the firm.
Market value of the existing owner's equity
The Sarbanes-Oxley Act of 2002 is a governmental response to:
a. increased federal taxes.
b. the terrorists attacks on 9/11/2001.
c. decreasing corporate dividend payments.
d. new stock trading regulations by the stock exchanges.
e. corporate scandals
Corporate Scandals
The Sarbanes-Oxley Act of 2002:
a. imposed insignificant compliance costs on smaller corporations.
b. caused some firms to "go dark".
c. increases the ability of corporate officers to borrow money from their employer.
d. required that the smaller firms on
Caused some firms to go dark
A firm which opts to "go dark" in response to the Sarbanes-Oxley Act:
a. must continue to provide audited financial statements which have been signed by the
corporate officers.
b. must continue to provide a detailed list of internal control deficiencies o
Can and most likely will provide less infor to its shareholder than it did before
Which one of the following actions by a financial manager creates an agency problem?
a. refusing to borrow money when doing so will create losses for the firm
b. refusing to lower selling prices if doing so will reduce the net profits
c. agreeing to expan
Agreeing to expand the company at the expense of the stockholder's value
Which of the following help convince managers to work in the best interest of the
stockholders?
I. compensation based on the value of the stock
II. stock option plans
III. threat of a company takeover
IV. threat of a proxy fight
a. I and II only
b. III an
I,II,III,IV
Which of the following are agency costs?
I. forgoing an investment opportunity which would add to the market value of the
owner's equity
II. paying a dividend to each of the existing shareholders
III. purchasing new equipment which increases the value of
I,IV
Which of the following represent cash outflows from a firm?
I. issuance of securities
II. payment of dividends
III. new loan proceeds
IV. payment of government taxes
a. I and III only
B. II and IV only
c. I and IV only
d. I, II, and IV only
e. II, III, an
II,IV
Which one of the following parties is considered a stakeholder of a firm?
a. employee
b. short-term creditor
c. long-term creditor
d. preferred stockholder
e. common stockholder
Employee
Which of the following represent means by which cash flows from a corporation back
into the financial markets?
I. repayment of long-term debt
II. payment of government taxes
III. payment of loan interest
IV. sale of corporate stock
a. I and II only
B. I a
I,III
Which one of the following is a primary market transaction?
a. a dealer selling shares of stock to an individual investor
b. a dealer buying newly issued shares of stock from a corporation
c. an individual investor selling shares of stock to another indiv
A dealer buying newly issued shares of stock from a corporation
he transfer of ownership of outstanding shares of a NYSE listed stock:
a. takes place in the primary market.
b. occurs in a dealer market.
c. is facilitated in the secondary markets.
d. creates an immediate tax liability for both the seller and the buyer.
Is facilitated in the secondary market
Which of the following statements concerning auction markets is (are) correct?
I. NASDAQ is an auction market.
II. The NYSE is an auction market.
III. All trades involve a dealer in an auction market.
IV. An auction market is called an over-the-counter ma
II
Which one of the following statements concerning stock exchanges is correct?
a. The NYSE has more listed stocks than NASDAQ.
b. The NYSE is a dealer market.
c. The exchange with the strictest listing requirements is NASDAQ.
d. Some large companies are lis
Some companies are listed on NASDAQ
Dealer markets:
a. are reserved strictly for trading debt securities.
b. only exist outside of the United States.
c. are called over-the-counter markets.
d. include the American and the Pacific Stock Exchanges.
e. list only the securities of the largest f
Are called over the counter markets
Which one of the following statements is correct concerning the NYSE?
a. A firm is expected to have a market value for its publicly held shares of at least $100
million to be listed on the NYSE.
b. The NYSE is the largest dealer market for listed securiti
A first is expected to have a market value for its publicly held shares of at least 100 mil to be listed on the NYSE
Which of the following statements concerning NASDAQ are correct?
I. Most smaller firms are listed on NASDAQ rather than on the NYSE.
II. NASDAQ is an electronic market.
III. NASDAQ is an auction market.
IV. NASDAQ is an OTC market.
a. I and II only
b. I a
I,II,IV