1. This book is mainly about
A. financial decisions made by corporations.
B. financial decisions made by households.
C. financial decisions made by governments.
D. financial decisions made by employees.
Accessibility: Keyboard Navigation
Difficulty: Basic
2. Shareholders of a corporation may be, among others,
A. individuals.
B. individuals and pension funds.
C. pension funds.
D. individuals, pension funds, and insurance companies.
Accessibility: Keyboard Navigation
Difficulty: Intermediate
3. Generally, a corporation is owned by its
A. managers.
B. board of directors and shareholders.
C. shareholders.
D. managers, board of directors, and shareholders.
, Accessibility: Keyboard Navigation
Difficulty: Basic
4. A corporation, potentially, has infinite life because it
A. is a legal entity.
B. has the same ownership and management.
C. has limited liability.
D. is closely regulated.
Accessibility: Keyboard Navigation
Difficulty: Intermediate
5. Limited liability is an important feature of
A. sole proprietorships.
B. partnerships.
C. corporations.
D. both partnerships and corporations.
Accessibility: Keyboard Navigation
Difficulty: Basic
6. As a legal entity, a corporation can perform the following functions except
A. borrow money and lend money.
B. borrow money, lend money, and sue and be sued.
C. vote.
D. borrow money, lend money, sue and be sued, and vote.
Accessibility: Keyboard Navigation
Difficulty: Intermediate
,7. Which of the following assets is tangible?
A. ExxonMobil's corporate headquarters building
B. Apple Inc.'s trademark
C. Hewlett-Packard's most recent printer patent
D. Microsoft's technical expertise
Accessibility: Keyboard Navigation
Difficulty: Intermediate
8. Which of the following types of assets are intangible?
A. Production machinery
B. Factories
C. Trademarks
D. Office equipment
Accessibility: Keyboard Navigation
Difficulty: Intermediate
9. A firm's investment decision is also called its
A. financing decision.
B. liquidity decision.
C. capital budgeting decision.
D. leasing decision.
Accessibility: Keyboard Navigation
Difficulty: Intermediate
10. Which of the following is not a financial asset?
, A. Common stock
B. Bank loans
C. Preferred stock
D. Buildings
Accessibility: Keyboard Navigation
Difficulty: Intermediate
11. Which of the following is an important function of financial markets?
A. Providing financing
B. Providing financing and liquidity
C. Providing financing, providing liquidity, reducing risk, and providing information
D. Providing information
Accessibility: Keyboard Navigation
Difficulty: Intermediate
12. Disadvantages of the corporate form include
A. agency costs.
B. double taxation.
C. cost of managing the corporation.
D. all of the options.
Accessibility: Keyboard Navigation
Difficulty: Intermediate
13. In the principal–agent framework,
A. shareholders are the principals.
B. managers are the principals.
A. financial decisions made by corporations.
B. financial decisions made by households.
C. financial decisions made by governments.
D. financial decisions made by employees.
Accessibility: Keyboard Navigation
Difficulty: Basic
2. Shareholders of a corporation may be, among others,
A. individuals.
B. individuals and pension funds.
C. pension funds.
D. individuals, pension funds, and insurance companies.
Accessibility: Keyboard Navigation
Difficulty: Intermediate
3. Generally, a corporation is owned by its
A. managers.
B. board of directors and shareholders.
C. shareholders.
D. managers, board of directors, and shareholders.
, Accessibility: Keyboard Navigation
Difficulty: Basic
4. A corporation, potentially, has infinite life because it
A. is a legal entity.
B. has the same ownership and management.
C. has limited liability.
D. is closely regulated.
Accessibility: Keyboard Navigation
Difficulty: Intermediate
5. Limited liability is an important feature of
A. sole proprietorships.
B. partnerships.
C. corporations.
D. both partnerships and corporations.
Accessibility: Keyboard Navigation
Difficulty: Basic
6. As a legal entity, a corporation can perform the following functions except
A. borrow money and lend money.
B. borrow money, lend money, and sue and be sued.
C. vote.
D. borrow money, lend money, sue and be sued, and vote.
Accessibility: Keyboard Navigation
Difficulty: Intermediate
,7. Which of the following assets is tangible?
A. ExxonMobil's corporate headquarters building
B. Apple Inc.'s trademark
C. Hewlett-Packard's most recent printer patent
D. Microsoft's technical expertise
Accessibility: Keyboard Navigation
Difficulty: Intermediate
8. Which of the following types of assets are intangible?
A. Production machinery
B. Factories
C. Trademarks
D. Office equipment
Accessibility: Keyboard Navigation
Difficulty: Intermediate
9. A firm's investment decision is also called its
A. financing decision.
B. liquidity decision.
C. capital budgeting decision.
D. leasing decision.
Accessibility: Keyboard Navigation
Difficulty: Intermediate
10. Which of the following is not a financial asset?
, A. Common stock
B. Bank loans
C. Preferred stock
D. Buildings
Accessibility: Keyboard Navigation
Difficulty: Intermediate
11. Which of the following is an important function of financial markets?
A. Providing financing
B. Providing financing and liquidity
C. Providing financing, providing liquidity, reducing risk, and providing information
D. Providing information
Accessibility: Keyboard Navigation
Difficulty: Intermediate
12. Disadvantages of the corporate form include
A. agency costs.
B. double taxation.
C. cost of managing the corporation.
D. all of the options.
Accessibility: Keyboard Navigation
Difficulty: Intermediate
13. In the principal–agent framework,
A. shareholders are the principals.
B. managers are the principals.
