CORPORATE FINANCE YAY EXAM
QUESTIONS WITH CORRECT ANSWERS
An employee has a claim on the cash flows of Westlake Machines. This claim is defined
as a claim by one of the firm's:
Multiple Choice
1. residual owners.
2. stakeholders.
3. financiers.
4. provisional partners.
5. shareholders - ANSWER-stakeholders
Which one of the following applies to a general partnership?
Multiple Choice
1. The firm's operations must be controlled by a single partner.
2. Any one of the partners can be held solely liable for all of the partnership's debt.
3. The profits of the firm are taxed as a separate entity.
4. Each partner's liability for the firm's debts is limited to each partner's investment in the
firm.
5. The profits of a general partnership are taxed the same as those of a corporation. -
ANSWER-2. Any one of the partners can be held solely liable for all of the partnership's
debt.
An auction market:
Multiple Choice
1. is an electronic means of exchanging securities.
2. has a physical trading floor.
3. handles primary market transactions exclusively.
4. is also referred to as an OTC market.
5. is dealer-based. - ANSWER-has a physical trading floor
Which one of the following statements is correct?
Multiple Choice
A. All of the major stock exchanges are U.S. based.
, B. The NYSE was created by the National Association of Securities Dealers in the early
1930s.
C. The Chicago Stock Exchange is a dealer market.
D. OTC markets have a physical trading floor generally located in either New York City
or Chicago.
E. The primary purpose of the NYSE is to match buyers with sellers. - ANSWER-E. The
primary purpose of the NYSE is to match buyers with sellers.
Which one of the following statements is correct?
Multiple Choice
A. Nasdaq has more listed stocks than does the NYSE.
B. The NYSE is a dealer market.
C. Nasdaq is an auction market.
D. Nasdaq has the most stringent listing requirements of any U.S. exchange.
E. The trading floor for Nasdaq is located in Chicago. - ANSWER-A. Nasdaq has more
listed stocks than does the NYSE.
Which one of the following situations is most apt to create an agency conflict?
Multiple Choice
Compensating a manager based on his or her division's net income
Giving all employees a bonus if a certain level of efficiency is maintained
Hiring an independent consultant to study the operating efficiency of the firm
Basing management bonuses on the length of employment
Laying off employees during a slack period - ANSWER-Basing management bonuses
on the length of employment
One example of a primary market transaction would be the:
Multiple Choice
sale of 100 shares of stock by Maria to her best friend.
QUESTIONS WITH CORRECT ANSWERS
An employee has a claim on the cash flows of Westlake Machines. This claim is defined
as a claim by one of the firm's:
Multiple Choice
1. residual owners.
2. stakeholders.
3. financiers.
4. provisional partners.
5. shareholders - ANSWER-stakeholders
Which one of the following applies to a general partnership?
Multiple Choice
1. The firm's operations must be controlled by a single partner.
2. Any one of the partners can be held solely liable for all of the partnership's debt.
3. The profits of the firm are taxed as a separate entity.
4. Each partner's liability for the firm's debts is limited to each partner's investment in the
firm.
5. The profits of a general partnership are taxed the same as those of a corporation. -
ANSWER-2. Any one of the partners can be held solely liable for all of the partnership's
debt.
An auction market:
Multiple Choice
1. is an electronic means of exchanging securities.
2. has a physical trading floor.
3. handles primary market transactions exclusively.
4. is also referred to as an OTC market.
5. is dealer-based. - ANSWER-has a physical trading floor
Which one of the following statements is correct?
Multiple Choice
A. All of the major stock exchanges are U.S. based.
, B. The NYSE was created by the National Association of Securities Dealers in the early
1930s.
C. The Chicago Stock Exchange is a dealer market.
D. OTC markets have a physical trading floor generally located in either New York City
or Chicago.
E. The primary purpose of the NYSE is to match buyers with sellers. - ANSWER-E. The
primary purpose of the NYSE is to match buyers with sellers.
Which one of the following statements is correct?
Multiple Choice
A. Nasdaq has more listed stocks than does the NYSE.
B. The NYSE is a dealer market.
C. Nasdaq is an auction market.
D. Nasdaq has the most stringent listing requirements of any U.S. exchange.
E. The trading floor for Nasdaq is located in Chicago. - ANSWER-A. Nasdaq has more
listed stocks than does the NYSE.
Which one of the following situations is most apt to create an agency conflict?
Multiple Choice
Compensating a manager based on his or her division's net income
Giving all employees a bonus if a certain level of efficiency is maintained
Hiring an independent consultant to study the operating efficiency of the firm
Basing management bonuses on the length of employment
Laying off employees during a slack period - ANSWER-Basing management bonuses
on the length of employment
One example of a primary market transaction would be the:
Multiple Choice
sale of 100 shares of stock by Maria to her best friend.
