FIN 310 Stewart Exam 1 Questions with 100% Correct Answers | Latest Version 2024 | Verified

The financial manager must execute his or her duties independent of the other activities of the firm in order to properly maximize the value of the firm. T/F - F Deciding upon the form of organization for a business is an important financial decision with potentially significant consequences for the future wealth of the owners. T/F - T The proper goal of the financial manager should be to maximize the firm's expected profit (or net income), since this will add the most wealth to each of the individual shareholders (owners) of the firm. T/F - F Maximizing Earnings Per Share (EPS) is an example of maximizing shareholder wealth. T/F - F An agency relationship between stockholders and managers. T/F - T An agency relationship exists when one or more persons hire another person to perform some service but withhold decision-making authority from that person. T/F - F Which of the following is not one of the things that causes a corporation to have a significant advantage over a partnership or a proprietorship? a. Limited liabilityb. Ease of transfer of ownership interest c. Unlimited life d. Elimination of double taxation e. Ability to retain earnings and thus convert income from personal income to capital gains - d. elimination of double taxation Which of the following statements is true? a. One of the benefits of incorporating your business is that you are entitled to receive unlimited liability. b. Sole proprietorships are subject to more regulations than corporations are subject to. c. Sole proprietorships do not have to pay corporate tax. d. All of the above are correct. e. None o