MGT 100 Kiousis Exam 1 UPDATED
ACTUAL Exam Questions and CORRECT
Answers
Facebook Case - CORRECT ANSWER - Acquired Whatsapp, Messenger, and Instagram
Sells data to third parties
Decision Theory - CORRECT ANSWER - A technique for assisting in reaching decisions
under uncertainty and risk - points to the best possible course.
Uses: initiation, ratification, implementation, and monitoring (IRIM)
Corporate Governance - CORRECT ANSWER - Decision rights divided among:
shareholders, board of directors, top management, and external monitors (bank, credit agency,
regulatory authorities)
Benefits of Ownership (public company) - CORRECT ANSWER - -Represented by shares
of stock
-No real limit
-Entitled to dividends
Types of US Firms - CORRECT ANSWER - -Sole Proprietorship (most businesses)
-Corporation (Most Net Income)
-Partnership
- Limited Liability Corporation (LLC)
Stages of Raising Capital - CORRECT ANSWER - 1. Family + Friends
2. VC + Angel Investors
3. Private Equity + Corporate investors
, 4. Public
Modigliani-Miller Theorem - CORRECT ANSWER - A firm's market value is calculated
using its earning power and the risk of its underlying assets.
Perfect Capital Market - CORRECT ANSWER - -investors trade securities at competitive
market price equal to present value of future cash flows
-no taxes, transaction costs, insurance costs
-firm's financial decisions do not change cash flows generated
Types of IPO's - CORRECT ANSWER - -Direct Listing (less common then IPO): No new
share a created (spotify) + no bank involved
Special Purpose Acquisition Company (SPAC) - CORRECT ANSWER - -SPAC raises
capital through (IPO) for the purpose of acquiring the company
-Provides the company capital when market conditions limit liquidity
Benefits + Risks of Going Public - CORRECT ANSWER - Pros
-Facilitates takeover activity
-Lower cost of capital
-Pecking order (after PE + debt)
-Allow insiders to cash out
Risks
-Control of decision-making authority
-Underpricing of IPOs
-Ownership dilution
-Bad market industry conditions
ACTUAL Exam Questions and CORRECT
Answers
Facebook Case - CORRECT ANSWER - Acquired Whatsapp, Messenger, and Instagram
Sells data to third parties
Decision Theory - CORRECT ANSWER - A technique for assisting in reaching decisions
under uncertainty and risk - points to the best possible course.
Uses: initiation, ratification, implementation, and monitoring (IRIM)
Corporate Governance - CORRECT ANSWER - Decision rights divided among:
shareholders, board of directors, top management, and external monitors (bank, credit agency,
regulatory authorities)
Benefits of Ownership (public company) - CORRECT ANSWER - -Represented by shares
of stock
-No real limit
-Entitled to dividends
Types of US Firms - CORRECT ANSWER - -Sole Proprietorship (most businesses)
-Corporation (Most Net Income)
-Partnership
- Limited Liability Corporation (LLC)
Stages of Raising Capital - CORRECT ANSWER - 1. Family + Friends
2. VC + Angel Investors
3. Private Equity + Corporate investors
, 4. Public
Modigliani-Miller Theorem - CORRECT ANSWER - A firm's market value is calculated
using its earning power and the risk of its underlying assets.
Perfect Capital Market - CORRECT ANSWER - -investors trade securities at competitive
market price equal to present value of future cash flows
-no taxes, transaction costs, insurance costs
-firm's financial decisions do not change cash flows generated
Types of IPO's - CORRECT ANSWER - -Direct Listing (less common then IPO): No new
share a created (spotify) + no bank involved
Special Purpose Acquisition Company (SPAC) - CORRECT ANSWER - -SPAC raises
capital through (IPO) for the purpose of acquiring the company
-Provides the company capital when market conditions limit liquidity
Benefits + Risks of Going Public - CORRECT ANSWER - Pros
-Facilitates takeover activity
-Lower cost of capital
-Pecking order (after PE + debt)
-Allow insiders to cash out
Risks
-Control of decision-making authority
-Underpricing of IPOs
-Ownership dilution
-Bad market industry conditions
