FIN 310 EXAM 1 - UNIVERSITY OF NORTH DAKOTA
The term "capital structure" refers to:
the mix of long-term debt and equity financing.
the types of assets a firm holds.
the length of time needed to repay debt. - Answers -the mix of long-term debt and
equity financing.
Which one of these statements is correct?
Financial managers have a fiduciary duty to stockholders.
Financial managers are concerned only with funds that flow to investors.
The chief financial officer generally reports directly to the corporate treasurer. -
Answers -Financial managers have a fiduciary duty to stockholders.
Quest Inc. operates as a partnership. Now the partners have decided to convert the
business into a corporation. Which of the following statements is CORRECT?
The firm's investors will be exposed to less liability, but they will find it more difficult to
transfer their ownership.
Quest shareholders (the ex-partners) will now be exposed to less liability.
The firm will find it more difficult to raise additional capital to support its growth. -
Answers -Quest shareholders (the ex-partners) will now be exposed to less liability.
The primary operating goal of a publicly-owned firm interested in serving its
stockholders should be to:
Minimize the chances of losses.
Maximize the stock price just prior to annual shareholder reports.
Maximize the stock's intrinsic value. - Answers -Maximize the stock's intrinsic value.
Which one of the following would be considered a capital budgeting decision?
Deciding to expand into a new line of products, at a cost of $5 million.
Issuing debt in the form of long-term bonds.
, Repurchasing shares of common stock. - Answers -Deciding to expand into a new line
of products, at a cost of $5 million.
The legal "life" of a corporation is:
permanent, regardless of current ownership.
equal to the life of its board of directors.
permanent until the stock holders sell their shares. - Answers -permanent, regardless
of current ownership.
Which of the firm's financial managers is most likely to be responsible for ensuring the
firm's taxes have been paid?
Treasurer
Controller
Chief Operating Officer - Answers -Controller
Which one of these should determine the minimum acceptable rate of return on a
capital investment?
The alternative investment opportunities available to investors
The profit margin of the existing firm
The rate of return on the firm's outstanding shares - Answers -The alternative
investment opportunities available to investors
Ethical decision making by management has a payoff for shareholders in terms of:
improved capital structure.
enhanced firm reputation value.
increased managerial benefits. - Answers -enhanced firm reputation value.
Which one of the following is a real asset?
A share of stock
A copyright
A checking account balance - Answers -A copyright
The term "capital structure" refers to:
the mix of long-term debt and equity financing.
the types of assets a firm holds.
the length of time needed to repay debt. - Answers -the mix of long-term debt and
equity financing.
Which one of these statements is correct?
Financial managers have a fiduciary duty to stockholders.
Financial managers are concerned only with funds that flow to investors.
The chief financial officer generally reports directly to the corporate treasurer. -
Answers -Financial managers have a fiduciary duty to stockholders.
Quest Inc. operates as a partnership. Now the partners have decided to convert the
business into a corporation. Which of the following statements is CORRECT?
The firm's investors will be exposed to less liability, but they will find it more difficult to
transfer their ownership.
Quest shareholders (the ex-partners) will now be exposed to less liability.
The firm will find it more difficult to raise additional capital to support its growth. -
Answers -Quest shareholders (the ex-partners) will now be exposed to less liability.
The primary operating goal of a publicly-owned firm interested in serving its
stockholders should be to:
Minimize the chances of losses.
Maximize the stock price just prior to annual shareholder reports.
Maximize the stock's intrinsic value. - Answers -Maximize the stock's intrinsic value.
Which one of the following would be considered a capital budgeting decision?
Deciding to expand into a new line of products, at a cost of $5 million.
Issuing debt in the form of long-term bonds.
, Repurchasing shares of common stock. - Answers -Deciding to expand into a new line
of products, at a cost of $5 million.
The legal "life" of a corporation is:
permanent, regardless of current ownership.
equal to the life of its board of directors.
permanent until the stock holders sell their shares. - Answers -permanent, regardless
of current ownership.
Which of the firm's financial managers is most likely to be responsible for ensuring the
firm's taxes have been paid?
Treasurer
Controller
Chief Operating Officer - Answers -Controller
Which one of these should determine the minimum acceptable rate of return on a
capital investment?
The alternative investment opportunities available to investors
The profit margin of the existing firm
The rate of return on the firm's outstanding shares - Answers -The alternative
investment opportunities available to investors
Ethical decision making by management has a payoff for shareholders in terms of:
improved capital structure.
enhanced firm reputation value.
increased managerial benefits. - Answers -enhanced firm reputation value.
Which one of the following is a real asset?
A share of stock
A copyright
A checking account balance - Answers -A copyright
