Practice questions for final exam
Practice questions for final exam FIN 323
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This 9 page Class Notes was uploaded by Leosinh on Tuesday April 26, 2016. The Class Notes belongs to FIN 323 at Marshall University taught by Dr. Shaorong Zhang in Spring 2016. Since its upload, it has received 6 views. For similar materials see Principles of Finance in Business at Marshall University.
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Date Created: 04/26/16
Practice questions for final exam Which of the following is least likely to be discussed in the articles of incorporation? A. How the firm is to be financed B. The purpose of the business C. The price range of the shares of stock D. How the board of directors is to be structured Which one of the following gives a corporation its permanence? A. Multiple owners B. Limited liability C. Corporation taxation D. Separation of ownership and control Which one of the following is a financial asset? A. A corporate bond B. A machine C. A patent D. A factory Which of these duties are responsibilities of the corporate treasurer? A. Financial statements and taxes B. Cash management and tax reporting C. Cash management and banking relationships D. Raising capital and financial statements The term "capital structure" refers to: A. the manner in which a firm obtains its long-term sources of funding. B. the length of time needed to repay debt. C. whether or not the firm invests in capital budgeting projects. D. the types of assets a firm acquires. When a corporation fails, the maximum that can be lost by an individual shareholder is: A. the amount of their initial investment. B. the amount of their share of the profits. C. their proportionate share required to pay the corporation's debts. D. the amount of their personal wealth. Which one of these statements is correct? A. Financial managers have a fiduciary duty to stockholders. B. Financial managers are concerned only with funds that flow to investors. C. The chief financial officer generally reports directly to the corporate treasurer. D. The corporate controller is primarily responsible for overseeing a firm's cash functions. Which of the following is a disadvantage to incorporating a business? A. Easier access to financial markets B. Limited liability C. Becoming a permanent legal entity D. Profits taxed at the corporate level and the shareholder level The overall goal of capital budgeting projects should be to: A. decrease the firm's reliance on debt. B. increase the firm's sales. C. increase the firm's outstanding shares of stock. D. increase the wealth of the firm's shareholders. Firms can alter their capital structure by: A. not accepting any new capital budgeting projects. B. investing in intangible assets. C. issuing stock to repay debt. D. becoming a limited liability company. Corporate managers are expected to make corporate decisions that are in the best interest of: A. top corporate management. B. the corporation's board of directors. C. the corporation's shareholders. D. all corporate employees. A firm decides to pay for a small investment project through a $1 million increase in short-term bank loans. This is best described as an example of a(n): A. financing decision. B. investment decision. C. capital budgeting decision. D. capital expenditure decision. Which one of these is not considered to be a security? A. Shares of GE stock B. A bond traded in the financial market C. A mortgage loan issued and held by a bank D. A convertible bond issued to the public "Double taxation" refers to: A. all partners paying equal taxes on profits. B. corporations paying taxes on both dividends and retained earnings. C. paying taxes on profits at the corporate level and dividends at the personal level. D. the fact that marginal tax rates are doubled for corporations. In the case of a limited liability partnership, ________ has/have limited liability. A. only some of partners B. only the managing partner C. all of the partners D. none of the partners A common problem for closely held corporations is: A. the lack of access to substantial amounts of capital. B. the restriction that shareholders receive only one vote each. C. the separation of ownership and management. D. an abundance of agency problems. Which one of these is a capital budgeting decision? A. Deciding between issuing stock or debt securities B. Deciding whether or not the firm should go public C. Deciding if the firm should repurchase some of its outstanding shares D. Deciding whether to buy a new machine or repair the old machine The best criterion for success in a capital budgeting decision would be to: A. minimize the cost of the investment. B. maximize the number of capital budgeting projects. C. maximize the value added to the firm. D. finance all capital budgeting projects with debt. Which of the following statements best distinguishes the difference between real and financial assets? A. Real assets have less value than financial assets. B. Real assets are tangible; financial assets are not. C. Financial assets represent claims to income that is generated by real assets. D. Financial assets appreciate in value; real assets depreciate in value.
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