FINA 3332 EXAM 1 QUESTION SET WITH
RATIONALES AND INTRODUCTORY
CORPORATE FINANCE APPLICATION REVIEW
2026
◉ When an individual or organization acquires enough stock
ownership and/or the ability to vote on behalf of other shareholders
to replace the board of directors against their will, it is known as;
Answer: a hostile takeover.
◉ The most important function of a market maker on the New York
Stock Exchange is to;
Answer: provide liquidity.
◉ Which of the following is an example of an agency cost?
Answer: Executive stock options
◉ A limited liability company combines the:
Answer: limited liability of a corporation with the ownership of a
partnership
,◉ A corporation may elect to make a periodic cash distribution to its
shareholders, which is known as a(n);
Answer: dividend payment.
◉ The ability to sell an investment quickly without a significant loss
in value is known as;
Answer: liquidity.
◉ An agency problem occurs when;
Answer: managers put their own self-interests above shareholders.
◉ The market where financial securities are offered for sale to the
public for the very first time is known as the:
Answer: primary market
◉ Shareholders exercise control of a corporation by;
Answer: electing a board of directors
◉ If the managers of a company are not the owners of the company,
they are considered:
Answer: agents
◉ Dark pools are alternative trading systems that;
, Answer: reveal limited pricing and volume information.
◉ Researchers estimate that, including dark pools, there are as
many as stock trading venues where investors can buy and sell
stock.
Answer: 50
◉ Which of the following is one of the primary questions addressed
by financial managers?
Answer: Which projects should the firm invest resources in to
increase shareholder wealth?
◉ One of the most important functions of the secondary market is
to:
Answer: provide liquidity to investors
◉ A __________ is a form of business organization that is considered an
artificial being and has limited liability.
Answer: corporation
◉ If the lowest limit sell order for IBM stock is $138 per share and
the highest limit buy order is $136, the bid-ask spread on IBM stock
is;
Answer: $2
RATIONALES AND INTRODUCTORY
CORPORATE FINANCE APPLICATION REVIEW
2026
◉ When an individual or organization acquires enough stock
ownership and/or the ability to vote on behalf of other shareholders
to replace the board of directors against their will, it is known as;
Answer: a hostile takeover.
◉ The most important function of a market maker on the New York
Stock Exchange is to;
Answer: provide liquidity.
◉ Which of the following is an example of an agency cost?
Answer: Executive stock options
◉ A limited liability company combines the:
Answer: limited liability of a corporation with the ownership of a
partnership
,◉ A corporation may elect to make a periodic cash distribution to its
shareholders, which is known as a(n);
Answer: dividend payment.
◉ The ability to sell an investment quickly without a significant loss
in value is known as;
Answer: liquidity.
◉ An agency problem occurs when;
Answer: managers put their own self-interests above shareholders.
◉ The market where financial securities are offered for sale to the
public for the very first time is known as the:
Answer: primary market
◉ Shareholders exercise control of a corporation by;
Answer: electing a board of directors
◉ If the managers of a company are not the owners of the company,
they are considered:
Answer: agents
◉ Dark pools are alternative trading systems that;
, Answer: reveal limited pricing and volume information.
◉ Researchers estimate that, including dark pools, there are as
many as stock trading venues where investors can buy and sell
stock.
Answer: 50
◉ Which of the following is one of the primary questions addressed
by financial managers?
Answer: Which projects should the firm invest resources in to
increase shareholder wealth?
◉ One of the most important functions of the secondary market is
to:
Answer: provide liquidity to investors
◉ A __________ is a form of business organization that is considered an
artificial being and has limited liability.
Answer: corporation
◉ If the lowest limit sell order for IBM stock is $138 per share and
the highest limit buy order is $136, the bid-ask spread on IBM stock
is;
Answer: $2
