FIN 300 Final Exam with correct answers
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One |of |the |most |important |disadvantages |of |the |corporate |form |of |business |is:
a. |limited |owner |liability
b. |ease |of |transferring |ownership
c. |double |taxation
d. |unlimited |owner |liability |- |✔✔💯c. |double |taxation
Profit |maximization:
a. |is |the |ultimate |goal |of |a |firm
b. |is |a |long-run |concept
c. |always |maximizes |the |wealth |of |the |owners
d. |does |not |consider |future |cash |flows |or |risk |- |✔✔💯d. |does |not |consider |future |cash |flows |or |risk
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?
a. |a |sole |proprietorship |due |to |its |low |cost |and |ease |of |formation
b. |a |partnership |due |to |its |low |cost |and |diversitifcation |of |ownership
c. |a |corporation |due |to |its |limited |liability
d. |any |of |the |above |would |be |equally |acceptable |- |✔✔💯c. |a |corporation |due |to |its |limited |liability
Which |of |the |following |is |true?
a. |as |the |length |of |time |until |an |exepcted |cash |flow |increases, |the |stock |price |decreases
b. |as |the |riskiness |of |the |cash |flow |increases, |the |stock |price |decreases
, c. |as |the |size |of |the |expected |cash |inflow |decreases, |the |stock |price |increases
d. |all |of |the |above |statements |are |true |- |✔✔💯a. |as |the |length |of |time |until |an |exepcted |cash |flow |
increases, |the |stock |price |decreases
The |income |statement:
a. |is |a |financial |statement |that |shows |the |firm's |financial |position |at |a |particular |point |in |time
b. |is |a |financial |statement |that |summarizes |a |firm's |revenues |and |expenses |over |a |period |of |time
c. |is |a |financial |statement |that |summarizes |a |firm's |revenues |and |expenses |at |a |patricular |point |in |
time
d. |details |the |firm's |assets |and |liabilities |over |a |period |of |time |- |✔✔💯b. |is |a |financial |statement |that
|summarizes |a |firm's |revenues |and |expenses |over |a |period |of |time
Each |of |the |following |items |is |a |liability |with |the |exception |of:
a. |long-term |debt
b. |notes |payable
c. |prepaid |expenses
d. |accrued |expenses |- |✔✔💯c. |prepaid |expenses
Given |the |following |information, |calculate |earnings |per |share:
Interest |Expense |- |40,000
Net |Income |- |400,000
Preferred |dividends |paid |- |65,000
Common |dividends |paid |- |100,000
Common |Stock |Oustanding |- |100,000
a. |1.95
b. |3.35
c. |2.35
| | | | | |
One |of |the |most |important |disadvantages |of |the |corporate |form |of |business |is:
a. |limited |owner |liability
b. |ease |of |transferring |ownership
c. |double |taxation
d. |unlimited |owner |liability |- |✔✔💯c. |double |taxation
Profit |maximization:
a. |is |the |ultimate |goal |of |a |firm
b. |is |a |long-run |concept
c. |always |maximizes |the |wealth |of |the |owners
d. |does |not |consider |future |cash |flows |or |risk |- |✔✔💯d. |does |not |consider |future |cash |flows |or |risk
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?
a. |a |sole |proprietorship |due |to |its |low |cost |and |ease |of |formation
b. |a |partnership |due |to |its |low |cost |and |diversitifcation |of |ownership
c. |a |corporation |due |to |its |limited |liability
d. |any |of |the |above |would |be |equally |acceptable |- |✔✔💯c. |a |corporation |due |to |its |limited |liability
Which |of |the |following |is |true?
a. |as |the |length |of |time |until |an |exepcted |cash |flow |increases, |the |stock |price |decreases
b. |as |the |riskiness |of |the |cash |flow |increases, |the |stock |price |decreases
, c. |as |the |size |of |the |expected |cash |inflow |decreases, |the |stock |price |increases
d. |all |of |the |above |statements |are |true |- |✔✔💯a. |as |the |length |of |time |until |an |exepcted |cash |flow |
increases, |the |stock |price |decreases
The |income |statement:
a. |is |a |financial |statement |that |shows |the |firm's |financial |position |at |a |particular |point |in |time
b. |is |a |financial |statement |that |summarizes |a |firm's |revenues |and |expenses |over |a |period |of |time
c. |is |a |financial |statement |that |summarizes |a |firm's |revenues |and |expenses |at |a |patricular |point |in |
time
d. |details |the |firm's |assets |and |liabilities |over |a |period |of |time |- |✔✔💯b. |is |a |financial |statement |that
|summarizes |a |firm's |revenues |and |expenses |over |a |period |of |time
Each |of |the |following |items |is |a |liability |with |the |exception |of:
a. |long-term |debt
b. |notes |payable
c. |prepaid |expenses
d. |accrued |expenses |- |✔✔💯c. |prepaid |expenses
Given |the |following |information, |calculate |earnings |per |share:
Interest |Expense |- |40,000
Net |Income |- |400,000
Preferred |dividends |paid |- |65,000
Common |dividends |paid |- |100,000
Common |Stock |Oustanding |- |100,000
a. |1.95
b. |3.35
c. |2.35
