FINA 307 Exam 1 ACTUAL UPDATED QUESTIONS AND CORRECT ANSWERS
T/F: Financing decisions are used to determine how to True
raise the cash necessary for investments.
Which of the following is a financial asset? c. A new share of Google's stock
a. A patent
b. An iPhone
c. A share of Google's stock
d. New brand of potato chips
A firm should only purchase real assets only if the assets d. Add value to the firm
________.
a. Increase market share
b. Increase profits
c. Increase productivity
d. Add value to the firm
, Which one of the following would be considered a b. Deciding to expand into a new line of products, at a cost of $5 million
capital budgeting decision?
a. Planning to issue common stock rather than issuing
preferred stock
b. Deciding to expand into a new line of products, at a
cost of $5 million
c. Repurchasing shares of common stock
d. Issuing debt in the form of long-term bonds
Which of the following correctly states the difference c. Equity represents ownership.
between debt and equity?
a. Shareholders do not have voting rights while lenders
have voting rights.
b. A share of Microsoft stock is a financial obligation to
Microsoft.
c. Equity represents ownership.
d. A firm will have to file for bankruptcy if this firm misses
a dividend payment.
Which of the following statements best distinguishes the c. Financial assets represent claims to income that is generated by real assets.
difference between real and financial assets?
a. Real assets have less value than financial assets.
b. Real assets are tangible; financial assets are not.
c. Financial assets represent claims to income that is
generated by real assets.
d. Financial assets appreciate in value; real assets
depreciate in value.
Which of the following would be considered an d. Limited liability
ADVANTAGE of a corporation?
a. Double taxation
b. Managers of a corporation cannot be owners of this
corporation.
c. No separation between management and ownership
d. Limited liability
An example of a firm's financing decision would be: b. Issuing 10-year versus 20-year bonds.
a. Deciding whether or not to increase the price of its
products.
b. Issuing 10-year versus 20-year bonds.
c. Acquiring a competitive firm.
d. Determining how much to pay for a specific asset.
T/F: Financing decisions are used to determine how to True
raise the cash necessary for investments.
Which of the following is a financial asset? c. A new share of Google's stock
a. A patent
b. An iPhone
c. A share of Google's stock
d. New brand of potato chips
A firm should only purchase real assets only if the assets d. Add value to the firm
________.
a. Increase market share
b. Increase profits
c. Increase productivity
d. Add value to the firm
, Which one of the following would be considered a b. Deciding to expand into a new line of products, at a cost of $5 million
capital budgeting decision?
a. Planning to issue common stock rather than issuing
preferred stock
b. Deciding to expand into a new line of products, at a
cost of $5 million
c. Repurchasing shares of common stock
d. Issuing debt in the form of long-term bonds
Which of the following correctly states the difference c. Equity represents ownership.
between debt and equity?
a. Shareholders do not have voting rights while lenders
have voting rights.
b. A share of Microsoft stock is a financial obligation to
Microsoft.
c. Equity represents ownership.
d. A firm will have to file for bankruptcy if this firm misses
a dividend payment.
Which of the following statements best distinguishes the c. Financial assets represent claims to income that is generated by real assets.
difference between real and financial assets?
a. Real assets have less value than financial assets.
b. Real assets are tangible; financial assets are not.
c. Financial assets represent claims to income that is
generated by real assets.
d. Financial assets appreciate in value; real assets
depreciate in value.
Which of the following would be considered an d. Limited liability
ADVANTAGE of a corporation?
a. Double taxation
b. Managers of a corporation cannot be owners of this
corporation.
c. No separation between management and ownership
d. Limited liability
An example of a firm's financing decision would be: b. Issuing 10-year versus 20-year bonds.
a. Deciding whether or not to increase the price of its
products.
b. Issuing 10-year versus 20-year bonds.
c. Acquiring a competitive firm.
d. Determining how much to pay for a specific asset.
