FIN300 Questions with Correct Solutions
Question:
1. 1) What long term investments should you make?
2) Where will you get the long term financing to pay for your investments?
3) How will you manage everyday financial activities?
Answer:
Corporate Finance
Question:
2. Capital Budgeting
Answer:
the process of planning and managing a firm's long term investments, what a company actual
is
Question:
3. Capital Structure
Answer:
the mixture of debt and equity maintained by a firm
Question:
4. Treasurer
Answer:
1) Cash and Credit manager
2) Capital expenditures
3) Financial planning
Question:
5. Essence of Capital Budgeting
Answer:
size, timing, risk of future cash flows
Question:
6. Working Capital
Answer:
A firm's short term assets and liabilities, difference between the 2
Question:
7. Sole proprietorship
,Answer:
A business owned by a single individual. Unlimited liability, only taxed as personal income
Question:
8. Sole Proprietorship AD- VANTAGE
Answer:
-Easy to start -Least regulated -Singles Owner -Keep all profits -Act decisively -Taxed ONCE
as personal income
Question:
9. Sole Proprietorship DISADVANTAGE
Answer:
-Limited to life of owner (secret sauce dies with them) -Equity capital limited to owners
personal wealth
- unlimited liability -Difficult to sell ownership -difficult to transfer ownership -illiquid -Forgo
specialization
Question:
10. Partnership
Answer:
A business formed by two or more individuals
Question:
11. Partnership ADVAN- TAGE
Answer:
-More capital available -Specialization -Relatively easy to start -Income taxed once as
personal income
Question:
12. Partnership DISAD- VANTAGE
Answer:
-Unlimited liability -Partnership dissolver when one partner dies to wishes to sell -Difficult to
transfer ownership
Question:
13. General partnership
Answer:
Manage operations
, Question:
14. Limited partnership
Answer:
Determined by actions. Limited liability IF and ONLY IF no involvement in day to day
operations
Question:
15. Corporation
Answer:
A business created as a distinct legal entity composed of one or more individuals or entities.
Fictional Person
Question:
16. Cooperation ADVAN- TAGE
Answer:
-Limited Liability -Easy to raise capital -Unlimited life (only die financial death of liquidation)
-Separation of ownership and management -Transfer ownership is easy -S corp, tax choice
Question:
17. Corporation DISAD- VANTAGE
Answer:
-Separation of ownership and management -Regulation -C-corp is double taxed
Question:
18. LLC
Answer:
Limited liability company (relatively new)
Question:
19. LLC ADVANTAGE
Answer:
-limited liability -unlimited life -less regulation than corp -taxed as personal income
Question:
20. LLC DISADVANTAGE
Answer:
-less precedence (on which law is based) -difficult to transfer ownership
- difficult to go public (members instead of stockholders)
Question:
1. 1) What long term investments should you make?
2) Where will you get the long term financing to pay for your investments?
3) How will you manage everyday financial activities?
Answer:
Corporate Finance
Question:
2. Capital Budgeting
Answer:
the process of planning and managing a firm's long term investments, what a company actual
is
Question:
3. Capital Structure
Answer:
the mixture of debt and equity maintained by a firm
Question:
4. Treasurer
Answer:
1) Cash and Credit manager
2) Capital expenditures
3) Financial planning
Question:
5. Essence of Capital Budgeting
Answer:
size, timing, risk of future cash flows
Question:
6. Working Capital
Answer:
A firm's short term assets and liabilities, difference between the 2
Question:
7. Sole proprietorship
,Answer:
A business owned by a single individual. Unlimited liability, only taxed as personal income
Question:
8. Sole Proprietorship AD- VANTAGE
Answer:
-Easy to start -Least regulated -Singles Owner -Keep all profits -Act decisively -Taxed ONCE
as personal income
Question:
9. Sole Proprietorship DISADVANTAGE
Answer:
-Limited to life of owner (secret sauce dies with them) -Equity capital limited to owners
personal wealth
- unlimited liability -Difficult to sell ownership -difficult to transfer ownership -illiquid -Forgo
specialization
Question:
10. Partnership
Answer:
A business formed by two or more individuals
Question:
11. Partnership ADVAN- TAGE
Answer:
-More capital available -Specialization -Relatively easy to start -Income taxed once as
personal income
Question:
12. Partnership DISAD- VANTAGE
Answer:
-Unlimited liability -Partnership dissolver when one partner dies to wishes to sell -Difficult to
transfer ownership
Question:
13. General partnership
Answer:
Manage operations
, Question:
14. Limited partnership
Answer:
Determined by actions. Limited liability IF and ONLY IF no involvement in day to day
operations
Question:
15. Corporation
Answer:
A business created as a distinct legal entity composed of one or more individuals or entities.
Fictional Person
Question:
16. Cooperation ADVAN- TAGE
Answer:
-Limited Liability -Easy to raise capital -Unlimited life (only die financial death of liquidation)
-Separation of ownership and management -Transfer ownership is easy -S corp, tax choice
Question:
17. Corporation DISAD- VANTAGE
Answer:
-Separation of ownership and management -Regulation -C-corp is double taxed
Question:
18. LLC
Answer:
Limited liability company (relatively new)
Question:
19. LLC ADVANTAGE
Answer:
-limited liability -unlimited life -less regulation than corp -taxed as personal income
Question:
20. LLC DISADVANTAGE
Answer:
-less precedence (on which law is based) -difficult to transfer ownership
- difficult to go public (members instead of stockholders)
