FIN 300 Exam 1 Multiple Choice questions with
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correct answers
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Profit |maximization |as |a |goal |of |the |firm:
a. |is |an |economic |principle |and |not |an |accounting |one
b. |is |superior |to |other |goals |that |could |be |pursued
c. |maximizes |the |wealth |of |the |owners
d. |does |not |consider |cash |flow |or |risk |- |✔✔💯d. |does |not |consider |cash |flow |or |risk
Wealth |maximization |as |a |goal |of |the |firm:
a. |is |usually |discounted |by |bondholders
b. |takes |a |long-run |perspective |and |focuses |on |the |owners |of |the |firm
c. |is |a |long-run |perspective |used |by |financial |managers |for |internal |use |only
d. |is |an |accounting |number |- |✔✔💯b. |take |a |long-run |perspective |and |focuses |on |the |owners |of |the |
firm
An |important |advantage |a |general |partner |usually |has |is:
a. |limited |liability
b. |usually |a |larger |share |of |profit |distribution |when |the |firm |is |successful
c. |unlimited |liability
d. |profits |received |are |tax-free |- |✔✔💯b. |usually |a |larger |share |of |profit |distribution |when |the |firm |is
|successful
A |Subchapter |S |corporation:
a. |is |a |large |corporation
b. |has |limited |liability |for |its |owners
c. |is |double |taxed
d. |has |unlimited |liability |for |its |owners |- |✔✔💯b. |has |limited |liability |for |for |its |owners
,One |of |the |most |important |disadvantages |of |the |corporate |form |of |business |is:
a. |shares |that |can |be |sold
b. |professional |managers
c. |double |taxation
d. |unlimited |owner |liability |- |✔✔💯c. |double |taxation
A |manager |has |responsibilities |to |stockholders:
a. |for |legal |and |ethical |issues
b. |only |at |firms |that |are |public |corporations
c. |never
d. |only |where |legal |issues |apply |- |✔✔💯a. |for |legal |and |ethical |issues
Problems |with |seeking |profit |as |a |goal |of |the |firm |would |include |each |of |the |following |except:
a. |profit |is |completely |unrelated |to |cash |flow
b. |profit |goals |involve |timing |issues
c. |accountants |have |different |ways |of |measuring |profit
d. |profit |is |only |a |proxy |for |cash |flow |- |✔✔💯b. |accountants |have |different |ways |of |measuring |profit
Which |statement |is |correct |about |limited |partners?
a. |they |have |management |control |equal |to |their |percent |of |investment
b. |they |have |no |tax |liability
c. |they |can |lose |only |one |half |of |their |initial |investment
d. |there |is |no |limit |to |the |number |of |limited |partners |that |may |participate |- |✔✔💯d. |there |is |no |limit
|to |the |number |of |limited |partners |that |may |participate
Which |of |the |following |would |least |affect |the |value |of |a |firm's |stock?
a. |cashflows
b. |market |share
, c. |timing |on |cash |flows
d. |risk |associated |with |receiving |cash |flows |- |✔✔💯b. |market |share
Which |of |the |following |areas |of |finance |is |concerned |with |internal |decision-making |of |a |business?
a. |Financial |markets |and |institutions
b. |Financial |Management
c. |Investments
d. |Agency |Issues |- |✔✔💯b. |financial |managment
The |term |"financial |management" |refers |to:
a. |The |variety |of |job |titles |often |given |to |financial |managers.
b. |The |duties |of |the |one |person |who |makes |most |of |the |financial |decisions.
c. |The |process |of |decision-making |that |produces |value.
d. |The |chief |financial |officer |(CFO). |- |✔✔💯c. |the |process |of |decision-making |that |produces |value
"The |primary |financial |goal |of |the |business |firm |is |to |maximize |the |wealth |of |the |firm's |owners." |For |
a |corporation, |this |statement |means |that |managers |should |focus |on |maximizing |the |wealth |of |its |
shareholders |or |its:
a. |market |value
b. |sales |revenue
c. |net |income
d. |minimize |the |risk |- |✔✔💯a. |market |value
Which |of |the |following |is |associated |with |increasing |the |value |of |a |business?
a. |Increasing |cash |inflows
b. |Decreasing |the |time |when |cash |inflows |occur
c. |Decreasing |the |riskiness |of |future |cash |inflows
d. |All |of |the |above |- |✔✔💯d. |all |of |the |above
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correct answers
| |
Profit |maximization |as |a |goal |of |the |firm:
a. |is |an |economic |principle |and |not |an |accounting |one
b. |is |superior |to |other |goals |that |could |be |pursued
c. |maximizes |the |wealth |of |the |owners
d. |does |not |consider |cash |flow |or |risk |- |✔✔💯d. |does |not |consider |cash |flow |or |risk
Wealth |maximization |as |a |goal |of |the |firm:
a. |is |usually |discounted |by |bondholders
b. |takes |a |long-run |perspective |and |focuses |on |the |owners |of |the |firm
c. |is |a |long-run |perspective |used |by |financial |managers |for |internal |use |only
d. |is |an |accounting |number |- |✔✔💯b. |take |a |long-run |perspective |and |focuses |on |the |owners |of |the |
firm
An |important |advantage |a |general |partner |usually |has |is:
a. |limited |liability
b. |usually |a |larger |share |of |profit |distribution |when |the |firm |is |successful
c. |unlimited |liability
d. |profits |received |are |tax-free |- |✔✔💯b. |usually |a |larger |share |of |profit |distribution |when |the |firm |is
|successful
A |Subchapter |S |corporation:
a. |is |a |large |corporation
b. |has |limited |liability |for |its |owners
c. |is |double |taxed
d. |has |unlimited |liability |for |its |owners |- |✔✔💯b. |has |limited |liability |for |for |its |owners
,One |of |the |most |important |disadvantages |of |the |corporate |form |of |business |is:
a. |shares |that |can |be |sold
b. |professional |managers
c. |double |taxation
d. |unlimited |owner |liability |- |✔✔💯c. |double |taxation
A |manager |has |responsibilities |to |stockholders:
a. |for |legal |and |ethical |issues
b. |only |at |firms |that |are |public |corporations
c. |never
d. |only |where |legal |issues |apply |- |✔✔💯a. |for |legal |and |ethical |issues
Problems |with |seeking |profit |as |a |goal |of |the |firm |would |include |each |of |the |following |except:
a. |profit |is |completely |unrelated |to |cash |flow
b. |profit |goals |involve |timing |issues
c. |accountants |have |different |ways |of |measuring |profit
d. |profit |is |only |a |proxy |for |cash |flow |- |✔✔💯b. |accountants |have |different |ways |of |measuring |profit
Which |statement |is |correct |about |limited |partners?
a. |they |have |management |control |equal |to |their |percent |of |investment
b. |they |have |no |tax |liability
c. |they |can |lose |only |one |half |of |their |initial |investment
d. |there |is |no |limit |to |the |number |of |limited |partners |that |may |participate |- |✔✔💯d. |there |is |no |limit
|to |the |number |of |limited |partners |that |may |participate
Which |of |the |following |would |least |affect |the |value |of |a |firm's |stock?
a. |cashflows
b. |market |share
, c. |timing |on |cash |flows
d. |risk |associated |with |receiving |cash |flows |- |✔✔💯b. |market |share
Which |of |the |following |areas |of |finance |is |concerned |with |internal |decision-making |of |a |business?
a. |Financial |markets |and |institutions
b. |Financial |Management
c. |Investments
d. |Agency |Issues |- |✔✔💯b. |financial |managment
The |term |"financial |management" |refers |to:
a. |The |variety |of |job |titles |often |given |to |financial |managers.
b. |The |duties |of |the |one |person |who |makes |most |of |the |financial |decisions.
c. |The |process |of |decision-making |that |produces |value.
d. |The |chief |financial |officer |(CFO). |- |✔✔💯c. |the |process |of |decision-making |that |produces |value
"The |primary |financial |goal |of |the |business |firm |is |to |maximize |the |wealth |of |the |firm's |owners." |For |
a |corporation, |this |statement |means |that |managers |should |focus |on |maximizing |the |wealth |of |its |
shareholders |or |its:
a. |market |value
b. |sales |revenue
c. |net |income
d. |minimize |the |risk |- |✔✔💯a. |market |value
Which |of |the |following |is |associated |with |increasing |the |value |of |a |business?
a. |Increasing |cash |inflows
b. |Decreasing |the |time |when |cash |inflows |occur
c. |Decreasing |the |riskiness |of |future |cash |inflows
d. |All |of |the |above |- |✔✔💯d. |all |of |the |above
