FIN 101 EXAM 1 STUDY GUIDE
questions & answers graded A+
1. The process of managing a firm's long-term investments is called:
A. capital budgeting.
B. working capital management.
C. credit management.
D. cost accounting.
E. capital structure management. - correct answer ✔✔A
Short-term assets and short-term liabilities are referred to as the firm's:
A. cash flow.
B. capital budget.
C. capital structure.
D. working capital.
E. financing mix. - correct answer ✔✔D
A sole proprietorship is defined as a business:
A. that is five or less years old.
B. with two or less owners.
C. that is created informally.
D. that is owned by a single individual.
E. that has a single general partner. - correct answer ✔✔D
,Any situation where a potential conflict can arise between the firm's owners and its managers is
referred to as a(n):
A. organizational problem.
B. personnel conflict.
C. agency problem.
D. control issue.
E. compensation issue. - correct answer ✔✔C
The primary market refers to:
A. the original sale of securities by the issuer.
B. transactions between two institutional shareholders.
C. the sale of securities by an individual shareholder.
D. the first trade of a firm's securities when the financial markets open in the morning.
E. all transactions on the NYSE. - correct answer ✔✔A
The market for trading securities after the original sale is called the:
A. primary market.
B. private placement market.
C. secondary market.
D. listed market.
E. corporate market. - correct answer ✔✔C
The sale of securities to the general public by the issuer is known as a:
A. secondary market offering.
B. public offering.
C. private placement.
, D. private offering.
E. negotiated sale. - correct answer ✔✔B
The capital structure of a firm refers to the firm's:
A. buildings and equipment.
B. organizational chart.
C. available cash.
D. long-term debt and equity.
E. current assets and liabilities. - correct answer ✔✔D
In a general partnership, each general partner is personally liable for:
A. his or her proportionate share of any partnership debt that he or she personally approved.
B. his or her proportionate share of all partnership debts regardless of which partner incurred
that debt.
C. the total debts of the partnership, even if he or she was unaware that said debts were
incurred.
D. the total debts of the partnership up to the total amount he or she invested in the
partnership.
E. all personal and partnership debts incurred by any partner, even if he or she was unaware
that said debts were incurred. - correct answer ✔✔C
The primary goal of financial management is to maximize the:
A. current net income.
B. net working capital.
C. the number of shares outstanding.
D. market value of the existing stock.
E. capital structure. - correct answer ✔✔D
questions & answers graded A+
1. The process of managing a firm's long-term investments is called:
A. capital budgeting.
B. working capital management.
C. credit management.
D. cost accounting.
E. capital structure management. - correct answer ✔✔A
Short-term assets and short-term liabilities are referred to as the firm's:
A. cash flow.
B. capital budget.
C. capital structure.
D. working capital.
E. financing mix. - correct answer ✔✔D
A sole proprietorship is defined as a business:
A. that is five or less years old.
B. with two or less owners.
C. that is created informally.
D. that is owned by a single individual.
E. that has a single general partner. - correct answer ✔✔D
,Any situation where a potential conflict can arise between the firm's owners and its managers is
referred to as a(n):
A. organizational problem.
B. personnel conflict.
C. agency problem.
D. control issue.
E. compensation issue. - correct answer ✔✔C
The primary market refers to:
A. the original sale of securities by the issuer.
B. transactions between two institutional shareholders.
C. the sale of securities by an individual shareholder.
D. the first trade of a firm's securities when the financial markets open in the morning.
E. all transactions on the NYSE. - correct answer ✔✔A
The market for trading securities after the original sale is called the:
A. primary market.
B. private placement market.
C. secondary market.
D. listed market.
E. corporate market. - correct answer ✔✔C
The sale of securities to the general public by the issuer is known as a:
A. secondary market offering.
B. public offering.
C. private placement.
, D. private offering.
E. negotiated sale. - correct answer ✔✔B
The capital structure of a firm refers to the firm's:
A. buildings and equipment.
B. organizational chart.
C. available cash.
D. long-term debt and equity.
E. current assets and liabilities. - correct answer ✔✔D
In a general partnership, each general partner is personally liable for:
A. his or her proportionate share of any partnership debt that he or she personally approved.
B. his or her proportionate share of all partnership debts regardless of which partner incurred
that debt.
C. the total debts of the partnership, even if he or she was unaware that said debts were
incurred.
D. the total debts of the partnership up to the total amount he or she invested in the
partnership.
E. all personal and partnership debts incurred by any partner, even if he or she was unaware
that said debts were incurred. - correct answer ✔✔C
The primary goal of financial management is to maximize the:
A. current net income.
B. net working capital.
C. the number of shares outstanding.
D. market value of the existing stock.
E. capital structure. - correct answer ✔✔D
