FIN 325 - Exam 1 questions with Correct Answers
Jenna has been promoted and is now in charge of all external financing.
In other words, she is in charge of: Correct Answer-A. capital structure
management
Uptown Markets is financed with 45 percent debt and 55 percent equity.
This mixture of debt and equity is referred to as the firm's: Correct
Answer-A. capital structure.
Theo's BBQ has $48,000 in current assets and $39,000 in current
liabilities. Decisions related to these accounts are referred to as: Correct
Answer-C. working capital management.
Will and Bill both enjoy sunshine, water, and surfboards. Thus, the two
friends decided to create a business together renting surfboards, paddle
boats, and inflatable devices in California. Will and Bill will equally
share in the decision making and in the business profits or losses. Which
type of business did they create if they both have full personal liability
for the firm's debts? Correct Answer-E. General partnership
Matt and Alicia created a firm that is a separate legal entity and will
share ownership of that firm on a 75/25 basis. Which type of entity did
they create if they have no personal liability for the firm's debts? Correct
Answer-B. Corporation
The potential conflict of interest between a firm's owners and its
managers is referred to as which type of conflict? Correct Answer-D.
Agency
,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: Correct Answer-E.
stakeholders.
The shareholders of Weil's Markets would benefit if the firm were to be
acquired by Better Foods. However, Weil's board of directors rejects the
acquisition offer. This is an example of: Correct Answer-D. an agency
conflict.
When conducting a financial analysis of a firm, financial analysts:
Correct Answer-C. frequently use accounting information.
Jamie is employed as a currency trader in the Japanese yen market. Her
job falls into which one of the following areas of finance? Correct
Answer-A. International finance
If you accept a job as a domestic security analyst for a brokerage firm,
you are most likely working in which one of the following financial
areas? Correct Answer-E. Investments
Which one of the following occupations best fits into the corporate area
of finance? Correct Answer-C. Chief financial officer
Which one of the following functions is generally a responsibility
assigned to the corporate treasurer? Correct Answer-E. Capital
expenditures
,Which one of the following functions should be assigned to the
corporate treasurer rather than to the controller? Correct Answer-D.
Cash management
Which one of the following correctly defines a common chain of
command within a corporation? Correct Answer-E. The controller
reports directly to the chief financial officer.
Capital budgeting includes the evaluation of which of the following?
Correct Answer-E. Size, timing, and risk of future cash flows
A sole proprietorship: Correct Answer-D. has its profits taxed as
personal income.
Which one of the following forms of business organization offers
liability protection to some of its owners but not to all of its owners?
Correct Answer-C. Limited partnership
Which one of the following statements correctly applies to a sole
proprietorship? Correct Answer-E. Obtaining additional equity is
dependent on the owner's personal finances.
In a general partnership, each partner is personally liable for: Correct
Answer-C. the total debts of the partnership, even if he or she was
unaware of those debts.
, Which one of the following is an advantage of being a limited partner?
Correct Answer-C. Losses limited to capital invested
Which one of the following statements about a limited partnership is
correct? Correct Answer-C. There must be at least one general partner.
A corporation: Correct Answer-B. is a legal entity separate from its
owners.
Which one of the following is contained in the corporate bylaws?
Correct Answer-A. Procedures for electing corporate directors
Corporate shareholders: Correct Answer-C. have the ability to change
the corporation's bylaws.
A limited liability company (LLC): Correct Answer-B. prefers its profits
be taxed as personal income to its owners.
Limited liability companies are primarily designed to: Correct Answer-
E. provide limited liability while avoiding double taxation.
The primary goal of financial management is to maximize: Correct
Answer-D. the market value of existing stock.
The goal of financial management is to increase the: Correct Answer-D.
current market value per share.
Jenna has been promoted and is now in charge of all external financing.
In other words, she is in charge of: Correct Answer-A. capital structure
management
Uptown Markets is financed with 45 percent debt and 55 percent equity.
This mixture of debt and equity is referred to as the firm's: Correct
Answer-A. capital structure.
Theo's BBQ has $48,000 in current assets and $39,000 in current
liabilities. Decisions related to these accounts are referred to as: Correct
Answer-C. working capital management.
Will and Bill both enjoy sunshine, water, and surfboards. Thus, the two
friends decided to create a business together renting surfboards, paddle
boats, and inflatable devices in California. Will and Bill will equally
share in the decision making and in the business profits or losses. Which
type of business did they create if they both have full personal liability
for the firm's debts? Correct Answer-E. General partnership
Matt and Alicia created a firm that is a separate legal entity and will
share ownership of that firm on a 75/25 basis. Which type of entity did
they create if they have no personal liability for the firm's debts? Correct
Answer-B. Corporation
The potential conflict of interest between a firm's owners and its
managers is referred to as which type of conflict? Correct Answer-D.
Agency
,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: Correct Answer-E.
stakeholders.
The shareholders of Weil's Markets would benefit if the firm were to be
acquired by Better Foods. However, Weil's board of directors rejects the
acquisition offer. This is an example of: Correct Answer-D. an agency
conflict.
When conducting a financial analysis of a firm, financial analysts:
Correct Answer-C. frequently use accounting information.
Jamie is employed as a currency trader in the Japanese yen market. Her
job falls into which one of the following areas of finance? Correct
Answer-A. International finance
If you accept a job as a domestic security analyst for a brokerage firm,
you are most likely working in which one of the following financial
areas? Correct Answer-E. Investments
Which one of the following occupations best fits into the corporate area
of finance? Correct Answer-C. Chief financial officer
Which one of the following functions is generally a responsibility
assigned to the corporate treasurer? Correct Answer-E. Capital
expenditures
,Which one of the following functions should be assigned to the
corporate treasurer rather than to the controller? Correct Answer-D.
Cash management
Which one of the following correctly defines a common chain of
command within a corporation? Correct Answer-E. The controller
reports directly to the chief financial officer.
Capital budgeting includes the evaluation of which of the following?
Correct Answer-E. Size, timing, and risk of future cash flows
A sole proprietorship: Correct Answer-D. has its profits taxed as
personal income.
Which one of the following forms of business organization offers
liability protection to some of its owners but not to all of its owners?
Correct Answer-C. Limited partnership
Which one of the following statements correctly applies to a sole
proprietorship? Correct Answer-E. Obtaining additional equity is
dependent on the owner's personal finances.
In a general partnership, each partner is personally liable for: Correct
Answer-C. the total debts of the partnership, even if he or she was
unaware of those debts.
, Which one of the following is an advantage of being a limited partner?
Correct Answer-C. Losses limited to capital invested
Which one of the following statements about a limited partnership is
correct? Correct Answer-C. There must be at least one general partner.
A corporation: Correct Answer-B. is a legal entity separate from its
owners.
Which one of the following is contained in the corporate bylaws?
Correct Answer-A. Procedures for electing corporate directors
Corporate shareholders: Correct Answer-C. have the ability to change
the corporation's bylaws.
A limited liability company (LLC): Correct Answer-B. prefers its profits
be taxed as personal income to its owners.
Limited liability companies are primarily designed to: Correct Answer-
E. provide limited liability while avoiding double taxation.
The primary goal of financial management is to maximize: Correct
Answer-D. the market value of existing stock.
The goal of financial management is to increase the: Correct Answer-D.
current market value per share.
