FINANCE 301 EXAM 1 QUESTIONS &
VERIFIED UPDATED ANSWERS ALL
PASSED
Using the balance sheet model of the firm, corporate finance may be thought of as -
Correct Answer ✔✔ Capital budgeting, capital structure, net working capital
Capital structure is... - Correct Answer ✔✔ the mix of long-term debt and equity in the
firm
What is the goal of the financial manager of a corporation? - Correct Answer ✔✔ To
maximize current market value per share of company stock
The secondary market is defined as - Correct Answer ✔✔ The market for the exchange
of securities that have already been issued by a firm
The ____ of a corporation include the corporation's name, its intended life, its business
purpose, and the number of shares that can be issued - Correct Answer ✔✔ Articles of
incorporation
Limited liability is never a characteristic of which form(s) of organization? - Correct
Answer ✔✔ sole proprietorship
What are the three types of financial management decisions? - Correct Answer ✔✔
capital budgeting, capital structure, working capital management
In a large corporation, what are the two distinct groups that report to the chief financial
officer? Which group is the focus of corporate finance? - Correct Answer ✔✔ Treasurer
& Controller
What type of organization is owned by one person, is the simplest organization type,
and has unlimited liability? - Correct Answer ✔✔ sole proprietorship
What type of organization has two or more owners and unlimited liability? - Correct
Answer ✔✔ partnership
What type of organization is a legal "person" separate and distinct from its owners and
has limited liability? - Correct Answer ✔✔ corporation
What is the number one primary goal in financial management? - Correct Answer ✔✔
maximize current value per share of existing stock
, Why might a company "go dark"? - Correct Answer ✔✔ Compliance with the Sarbanes-
Oxley Act is costly
What is a proxy? - Correct Answer ✔✔ the authority to vote on someone else's stock
Who owns a corporation? - Correct Answer ✔✔ stockholders
Who hires/fires upper management? - Correct Answer ✔✔ board of directors
What is a secondary market? - Correct Answer ✔✔ A market in which securities are
bought and sold to the public after the original sale
What is the difference between a dealer market and an auction market? - Correct
Answer ✔✔ Auction markets have physical location. Dealer markets involve buying and
selling done by a dealer electronically.
Is an IPO a primary market transaction or a secondary market transaction? - Correct
Answer ✔✔ primary market transaction
The ___ tax bracket is the extra tax that would be paid if one more dollar were earned
and the __ tax bracket is the tax bill divided by taxable income. - Correct Answer ✔✔
marginal; average
Which of the following statements does NOT accurately describe the relationship
between book value and market value? - Correct Answer ✔✔ Market value always
exceeds book value
Which of the following statements does accurately describe the relationship between
book value and market value? - Correct Answer ✔✔ Book value is an accounting
summary of value and is, therefore, inferior to market value as information for financial
managers
Market value is almost certainly different from book value because economic worth of
an asset and/or long-term liability changes over time
Financial managers should always evaluate market values when making decisions for
the firm
The market value of fixed assets is sometimes difficult to determine
What was Young, Inc.'s cash flow from assets during 2010? Use Exhibit I. - Correct
Answer ✔✔ -189
What was Young's, Inc.'s change in net working capital for 2010? Use Exhibit I. -
Correct Answer ✔✔ 198
VERIFIED UPDATED ANSWERS ALL
PASSED
Using the balance sheet model of the firm, corporate finance may be thought of as -
Correct Answer ✔✔ Capital budgeting, capital structure, net working capital
Capital structure is... - Correct Answer ✔✔ the mix of long-term debt and equity in the
firm
What is the goal of the financial manager of a corporation? - Correct Answer ✔✔ To
maximize current market value per share of company stock
The secondary market is defined as - Correct Answer ✔✔ The market for the exchange
of securities that have already been issued by a firm
The ____ of a corporation include the corporation's name, its intended life, its business
purpose, and the number of shares that can be issued - Correct Answer ✔✔ Articles of
incorporation
Limited liability is never a characteristic of which form(s) of organization? - Correct
Answer ✔✔ sole proprietorship
What are the three types of financial management decisions? - Correct Answer ✔✔
capital budgeting, capital structure, working capital management
In a large corporation, what are the two distinct groups that report to the chief financial
officer? Which group is the focus of corporate finance? - Correct Answer ✔✔ Treasurer
& Controller
What type of organization is owned by one person, is the simplest organization type,
and has unlimited liability? - Correct Answer ✔✔ sole proprietorship
What type of organization has two or more owners and unlimited liability? - Correct
Answer ✔✔ partnership
What type of organization is a legal "person" separate and distinct from its owners and
has limited liability? - Correct Answer ✔✔ corporation
What is the number one primary goal in financial management? - Correct Answer ✔✔
maximize current value per share of existing stock
, Why might a company "go dark"? - Correct Answer ✔✔ Compliance with the Sarbanes-
Oxley Act is costly
What is a proxy? - Correct Answer ✔✔ the authority to vote on someone else's stock
Who owns a corporation? - Correct Answer ✔✔ stockholders
Who hires/fires upper management? - Correct Answer ✔✔ board of directors
What is a secondary market? - Correct Answer ✔✔ A market in which securities are
bought and sold to the public after the original sale
What is the difference between a dealer market and an auction market? - Correct
Answer ✔✔ Auction markets have physical location. Dealer markets involve buying and
selling done by a dealer electronically.
Is an IPO a primary market transaction or a secondary market transaction? - Correct
Answer ✔✔ primary market transaction
The ___ tax bracket is the extra tax that would be paid if one more dollar were earned
and the __ tax bracket is the tax bill divided by taxable income. - Correct Answer ✔✔
marginal; average
Which of the following statements does NOT accurately describe the relationship
between book value and market value? - Correct Answer ✔✔ Market value always
exceeds book value
Which of the following statements does accurately describe the relationship between
book value and market value? - Correct Answer ✔✔ Book value is an accounting
summary of value and is, therefore, inferior to market value as information for financial
managers
Market value is almost certainly different from book value because economic worth of
an asset and/or long-term liability changes over time
Financial managers should always evaluate market values when making decisions for
the firm
The market value of fixed assets is sometimes difficult to determine
What was Young, Inc.'s cash flow from assets during 2010? Use Exhibit I. - Correct
Answer ✔✔ -189
What was Young's, Inc.'s change in net working capital for 2010? Use Exhibit I. -
Correct Answer ✔✔ 198
