BUSINESS 311 Combined EXAM questions
and CORRECT Answers
A major weakness of a partnership is.. - CORRECT ANSWERS the difficulty in liquidating or
transferring ownership
Under which of the following legal forms of organization is ownership readily transferable? -
CORRECT ANSWERS Corporation
Which of the following forms of organizations is the easiest to form? - CORRECT
ANSWERS sole proprietorship
Which of the following is true of a partnership and a corporation? - CORRECT ANSWERS In a
partnership incomes is taxed at the corporate level, where as in a corporation, income is taxed
twice.
Wealth maximization is the goal of a firm implies enhancing the wealth of - CORRECT
ANSWERS the firms stockholders
The key variables in the owner wealth maximization process are ________. - CORRECT
ANSWERS cash flows and risk
The primary economic principle used in managerial finance is - CORRECT ANSWERS marginal
cost- benefit analysis
Which of the following is the best measure to ensure that management decisions are in the best
interest of the stockholders? - CORRECT ANSWERS the management compensation to the
level of dividend per share
The conflict between the goals of a firm's owners and the goals of its non- owner managers is -
CORRECT ANSWERS The agency problem
The agency problem may result from a manager's concerns about - CORRECT
ANSWERS Maximizing shareholder value
, An ethics problem is expected to have ___________ Impact on a firms share price - CORRECT
ANSWERS Positive
Which of the following is considered as a violation of business ethics - CORRECT
ANSWERS Earnings management
Which of the following is one of the positive benefits of an effective ethics program? - CORRECT
ANSWERS Reduce potential litigation and judgement costs
The implementation of a pro-active ethics program is expected to result in - CORRECT
ANSWERS A positive corporate image and increased respect, but is not expected to affect
share price
An effective ethics program - CORRECT ANSWERS Can enhance a corporation's value
Corporate ethics policies typically apply to ___ in dealing with - CORRECT ANSWERS Employee
actions, all corporate constituents
Because equityholders are the last to receive any distribution of assets as a result of bankruptcy
proceedings, they expect ________. - CORRECT ANSWERS Greater returns from their
investment in the firm's stock
If expected return is less than required return on an asset, rational investors will - CORRECT
ANSWERS Sell the asset, which will drive the price down and cause the expected return to
reach the level of required return
A firm has an issue of preferred stock outstanding that has a stated annual dividend of $4. The
required return on the preferred stock has been estimated to be 16 percent. The value of the
preferred stock is ________. - CORRECT ANSWERS $25
Emmy Lou, Inc. has an expected dividend next year of $5.60 per share, a growth rate of dividends of
10 percent, and a required return of 20 percent. The value of a share of Emmy Lou, Inc.'s common
stock is ________. - CORRECT ANSWERS $56.00
and CORRECT Answers
A major weakness of a partnership is.. - CORRECT ANSWERS the difficulty in liquidating or
transferring ownership
Under which of the following legal forms of organization is ownership readily transferable? -
CORRECT ANSWERS Corporation
Which of the following forms of organizations is the easiest to form? - CORRECT
ANSWERS sole proprietorship
Which of the following is true of a partnership and a corporation? - CORRECT ANSWERS In a
partnership incomes is taxed at the corporate level, where as in a corporation, income is taxed
twice.
Wealth maximization is the goal of a firm implies enhancing the wealth of - CORRECT
ANSWERS the firms stockholders
The key variables in the owner wealth maximization process are ________. - CORRECT
ANSWERS cash flows and risk
The primary economic principle used in managerial finance is - CORRECT ANSWERS marginal
cost- benefit analysis
Which of the following is the best measure to ensure that management decisions are in the best
interest of the stockholders? - CORRECT ANSWERS the management compensation to the
level of dividend per share
The conflict between the goals of a firm's owners and the goals of its non- owner managers is -
CORRECT ANSWERS The agency problem
The agency problem may result from a manager's concerns about - CORRECT
ANSWERS Maximizing shareholder value
, An ethics problem is expected to have ___________ Impact on a firms share price - CORRECT
ANSWERS Positive
Which of the following is considered as a violation of business ethics - CORRECT
ANSWERS Earnings management
Which of the following is one of the positive benefits of an effective ethics program? - CORRECT
ANSWERS Reduce potential litigation and judgement costs
The implementation of a pro-active ethics program is expected to result in - CORRECT
ANSWERS A positive corporate image and increased respect, but is not expected to affect
share price
An effective ethics program - CORRECT ANSWERS Can enhance a corporation's value
Corporate ethics policies typically apply to ___ in dealing with - CORRECT ANSWERS Employee
actions, all corporate constituents
Because equityholders are the last to receive any distribution of assets as a result of bankruptcy
proceedings, they expect ________. - CORRECT ANSWERS Greater returns from their
investment in the firm's stock
If expected return is less than required return on an asset, rational investors will - CORRECT
ANSWERS Sell the asset, which will drive the price down and cause the expected return to
reach the level of required return
A firm has an issue of preferred stock outstanding that has a stated annual dividend of $4. The
required return on the preferred stock has been estimated to be 16 percent. The value of the
preferred stock is ________. - CORRECT ANSWERS $25
Emmy Lou, Inc. has an expected dividend next year of $5.60 per share, a growth rate of dividends of
10 percent, and a required return of 20 percent. The value of a share of Emmy Lou, Inc.'s common
stock is ________. - CORRECT ANSWERS $56.00
