PRINCIPLES OF CORPORATE FINANCE 2026
MASTER STUDY EXAM
◉ public offering. Answer: involves selling securities to the general
public
◉ private placement. Answer: negotiated sale involving a specific
buyer
◉ Public offering of debt and equity must be registered with the
Answer: Securities and Exchange Commission (SEC)
◉ two kinds of secondary markets Answer: auction markets and
dealer markets
◉ NYSE (New York Stock Exchange) Answer: The largest stock
market based on market capitalization and is floor based.
◉ NASDAQ Answer: American market for OTC securities
◉ Which one of the following forms of business organization offers
liability protection to some of its owners but not to all of its owners?
Answer: Limited Partnership
,◉ Which one of the following functions is generally a responsibility
assigned to the corporate treasurer? Answer: Which one of the
following functions is generally a responsibility assigned to the
corporate treasurer?
◉ Levi had an unexpected surprise when he returned home this
morning. He found that a chemical spill from a local manufacturer
had spilled over onto his property. The potential claim that he has
against this manufacturer is that of a(n): Answer: stakeholder
◉ An employee has a claim on the cash flows of Martin's Machines.
This claim is defined as a claim by one of the firm's: Answer:
stakeholders
◉ A sole proprietorship: Answer: has its profits taxed as personal
income
◉ Which one of the following is most apt to align management's
priorities with shareholders' interests? Answer: compensating
managers with shares of stock that must be held for a minimum of 3
years
, ◉ One advantage of the corporate form of organization is the:
Answer: ability to raise larger sums of equity capital than other
organizational forms.
◉ Corporate shareholders Answer: have the ability to change the
corporation's bylaws.
◉ True or False:
The process a private company becomes a public company is
referred to as initial public offering. Answer: True
◉ True or False:
When a company sells its stock for the first time publicly, it happens
on NYSE. Answer: False
◉ True or False:
NYSE is a dealer's market Answer: False
◉ True or False:
When a company sells its stock for the first time publicly, it takes
place in primary market. Answer: True
◉ Balance Sheet Answer: Snapshot of the firm; convenient means of
organizing and summarizing what a firm owns (its assets), when a
MASTER STUDY EXAM
◉ public offering. Answer: involves selling securities to the general
public
◉ private placement. Answer: negotiated sale involving a specific
buyer
◉ Public offering of debt and equity must be registered with the
Answer: Securities and Exchange Commission (SEC)
◉ two kinds of secondary markets Answer: auction markets and
dealer markets
◉ NYSE (New York Stock Exchange) Answer: The largest stock
market based on market capitalization and is floor based.
◉ NASDAQ Answer: American market for OTC securities
◉ Which one of the following forms of business organization offers
liability protection to some of its owners but not to all of its owners?
Answer: Limited Partnership
,◉ Which one of the following functions is generally a responsibility
assigned to the corporate treasurer? Answer: Which one of the
following functions is generally a responsibility assigned to the
corporate treasurer?
◉ Levi had an unexpected surprise when he returned home this
morning. He found that a chemical spill from a local manufacturer
had spilled over onto his property. The potential claim that he has
against this manufacturer is that of a(n): Answer: stakeholder
◉ An employee has a claim on the cash flows of Martin's Machines.
This claim is defined as a claim by one of the firm's: Answer:
stakeholders
◉ A sole proprietorship: Answer: has its profits taxed as personal
income
◉ Which one of the following is most apt to align management's
priorities with shareholders' interests? Answer: compensating
managers with shares of stock that must be held for a minimum of 3
years
, ◉ One advantage of the corporate form of organization is the:
Answer: ability to raise larger sums of equity capital than other
organizational forms.
◉ Corporate shareholders Answer: have the ability to change the
corporation's bylaws.
◉ True or False:
The process a private company becomes a public company is
referred to as initial public offering. Answer: True
◉ True or False:
When a company sells its stock for the first time publicly, it happens
on NYSE. Answer: False
◉ True or False:
NYSE is a dealer's market Answer: False
◉ True or False:
When a company sells its stock for the first time publicly, it takes
place in primary market. Answer: True
◉ Balance Sheet Answer: Snapshot of the firm; convenient means of
organizing and summarizing what a firm owns (its assets), when a
