Exam 1 Guide - Corporate Finance
UPDATED ACTUAL Exam Questions and
CORRECT Answers
From a finance viewpoint, the firm is a bundle of risky cash flows. - CORRECT
ANSWER - True
Which of the following claimants is paid last? - CORRECT ANSWER - Common
stockholders
Money market securities include - CORRECT ANSWER - commercial paper
Treasury bills
negotiable certificates of deposit
Finance can be defined as the study of the valuation and management of risk. - CORRECT
ANSWER - True
Which one of the following statements about a limited partnership is correct? - CORRECT
ANSWER - Each limited partnership must have at least one general partner.
Which of the following are considered to be significant financial innovations? - CORRECT
ANSWER - Patent law
Insurance
Limited liability
The major topics in corporate finance are - CORRECT ANSWER - capital budgeting.
capital structure.
working capital management.
, A business organization owned by two or more individuals or entities, each of whom has
unlimited liability for the firm's debts, is called a - CORRECT ANSWER - general
partnership
Stakeholders include which of the following? - CORRECT ANSWER - employees
suppliers
creditors
owners
An example of a principal of a firm is: - CORRECT ANSWER - the owner
Unethical behavior eliminates trust, and without trust businesses cannot interact. - CORRECT
ANSWER - True
The advantage of being a limited partner in a limited partnership is the ability to: - CORRECT
ANSWER - limit your losses to the amount invested in the firm.
__________ consists of the institutions and procedures that provide for transactions in short-term
debt instruments. - CORRECT ANSWER - Money markets
Hillary Rotteneggs wishes to form a company that will specialize in toxic waste removal and
storage. Which type of business form would be most advantageous? - CORRECT
ANSWER - A corporation due to its limited liability.
The sole proprietor: - CORRECT ANSWER - has unlimited liability relating to the
business
In the US, double taxation exists in the income of a - CORRECT ANSWER - corporation
UPDATED ACTUAL Exam Questions and
CORRECT Answers
From a finance viewpoint, the firm is a bundle of risky cash flows. - CORRECT
ANSWER - True
Which of the following claimants is paid last? - CORRECT ANSWER - Common
stockholders
Money market securities include - CORRECT ANSWER - commercial paper
Treasury bills
negotiable certificates of deposit
Finance can be defined as the study of the valuation and management of risk. - CORRECT
ANSWER - True
Which one of the following statements about a limited partnership is correct? - CORRECT
ANSWER - Each limited partnership must have at least one general partner.
Which of the following are considered to be significant financial innovations? - CORRECT
ANSWER - Patent law
Insurance
Limited liability
The major topics in corporate finance are - CORRECT ANSWER - capital budgeting.
capital structure.
working capital management.
, A business organization owned by two or more individuals or entities, each of whom has
unlimited liability for the firm's debts, is called a - CORRECT ANSWER - general
partnership
Stakeholders include which of the following? - CORRECT ANSWER - employees
suppliers
creditors
owners
An example of a principal of a firm is: - CORRECT ANSWER - the owner
Unethical behavior eliminates trust, and without trust businesses cannot interact. - CORRECT
ANSWER - True
The advantage of being a limited partner in a limited partnership is the ability to: - CORRECT
ANSWER - limit your losses to the amount invested in the firm.
__________ consists of the institutions and procedures that provide for transactions in short-term
debt instruments. - CORRECT ANSWER - Money markets
Hillary Rotteneggs wishes to form a company that will specialize in toxic waste removal and
storage. Which type of business form would be most advantageous? - CORRECT
ANSWER - A corporation due to its limited liability.
The sole proprietor: - CORRECT ANSWER - has unlimited liability relating to the
business
In the US, double taxation exists in the income of a - CORRECT ANSWER - corporation
