WASHU MGT 100 EXAM 1 (KIOUSIS) EXAM QUESTIONS
WITH ALL ANSWERS CORRECT
What are the 4 kinds of profit firms? - ANSWER Sole proprietorship,
partnerships, Limited Liability Company, Corporation
What does a non-profit firm do? - ANSWER Provides goods and services but
do not have the fundamental
purpose of earning profits
What type of firm is there the most of in the U.S.? - ANSWER Sole
Proprietorship
What type of firm in the U.S. has the most total net income? - ANSWER
Corporation
What does the Modigliani-Miller Theorem say? - ANSWER The total value of
a firm should not depend on its capital structure
How can maturing start-ups can raise equity capital? - ANSWER Angel
investors, venture capital firms
How can infant start-ups can raise equity capital? - ANSWER Family, friends,
earnings
How can mature private firms can raise equity capital? - ANSWER Private
equity firms, institutional investors, corporate investors
How do mature public firms raise equity capital? - ANSWER Public equity
What are the two ways a firm can bring their equity to public markets? -
ANSWER Initial public offering, direct listing
What are the benefits of going public? - ANSWER Facilitates takeover activity,
cost of capital, pecking order, allows insiders to cash out
, What are some considerations about going public? - ANSWER Control and
decision making authority, under-pricing of IPOs, avoid ownership dilution, bad
market industry conditions
What are some factors that influence IPO timing? - ANSWER Taking
advantage of bull market, IPO market conditions, need external capital to grow
at certain points in growth cycle
What is an stock market index? - ANSWER A collection of stocks that is
representative of the stock market.
What does the Dow Jones consist of? - ANSWER 30 most significant stocks in
the stock
market
What does the S&P 500 consist of? - ANSWER 500 largest companies on the
US stock
market
What does the NASDAQ Composite consist of? - ANSWER All stocks on the
NASDAQ
Market Cap (Capitalization) AKA Market Value of a Corporation - ANSWER
(Share price)*(number of shares outstanding)
What is the stock market called when the economy is great and stock prices are
rising? - ANSWER Bull market
What is the stock market called when the economy is bad and a recession is
looming? - ANSWER Bear market
What is the Agency Theory? - ANSWER The interests of shareholders and
management may not align
What is a solution to the Agency Theory problem? - ANSWER Aligning
incentives
WITH ALL ANSWERS CORRECT
What are the 4 kinds of profit firms? - ANSWER Sole proprietorship,
partnerships, Limited Liability Company, Corporation
What does a non-profit firm do? - ANSWER Provides goods and services but
do not have the fundamental
purpose of earning profits
What type of firm is there the most of in the U.S.? - ANSWER Sole
Proprietorship
What type of firm in the U.S. has the most total net income? - ANSWER
Corporation
What does the Modigliani-Miller Theorem say? - ANSWER The total value of
a firm should not depend on its capital structure
How can maturing start-ups can raise equity capital? - ANSWER Angel
investors, venture capital firms
How can infant start-ups can raise equity capital? - ANSWER Family, friends,
earnings
How can mature private firms can raise equity capital? - ANSWER Private
equity firms, institutional investors, corporate investors
How do mature public firms raise equity capital? - ANSWER Public equity
What are the two ways a firm can bring their equity to public markets? -
ANSWER Initial public offering, direct listing
What are the benefits of going public? - ANSWER Facilitates takeover activity,
cost of capital, pecking order, allows insiders to cash out
, What are some considerations about going public? - ANSWER Control and
decision making authority, under-pricing of IPOs, avoid ownership dilution, bad
market industry conditions
What are some factors that influence IPO timing? - ANSWER Taking
advantage of bull market, IPO market conditions, need external capital to grow
at certain points in growth cycle
What is an stock market index? - ANSWER A collection of stocks that is
representative of the stock market.
What does the Dow Jones consist of? - ANSWER 30 most significant stocks in
the stock
market
What does the S&P 500 consist of? - ANSWER 500 largest companies on the
US stock
market
What does the NASDAQ Composite consist of? - ANSWER All stocks on the
NASDAQ
Market Cap (Capitalization) AKA Market Value of a Corporation - ANSWER
(Share price)*(number of shares outstanding)
What is the stock market called when the economy is great and stock prices are
rising? - ANSWER Bull market
What is the stock market called when the economy is bad and a recession is
looming? - ANSWER Bear market
What is the Agency Theory? - ANSWER The interests of shareholders and
management may not align
What is a solution to the Agency Theory problem? - ANSWER Aligning
incentives
