FINA 3332 - Principles of Financial
Management FINAL EXAM QUESTIONS
AND ANSWERS RATED A+(2025-2026)
EDITION.
The term multinational corporation is used to describe a firm that operates in two or more
countries.
True or False - Answer True
Which of the following represents a difference between an S corporation and a limited liability
company(LLC)?
a. An S corporation can have more than one type of stock outstanding, whereas an LLC can have
only one type of stock outstanding.
b. An S corporation can choose to be taxed as a corporation or as a partnership, whereas an LLC
is taxed as a corporation only.
c. An S corporation is subject to unlimited personal liability of the owners, whereas an LLC is
subject to limited personal liability.
d. An S corporation has no more than 100 stockholders, whereas an LLC can have more than
100 stockholders (members).
e. An S corporation's business income is subject to double taxation, whereas an LLC's business
income is taxed only once. - Answer d. An S corporation has no more than 100 stockholders,
whereas an LLC can have more than 100 stockholders (members).
Which of the following is true of the greater concentration of ownership in non-U.S. firms than
in U.S. firms?
a. It makes it easy to change managers in non-U.S. firms.
b. It permits greater monitoring and control by individuals or groups than the more dispersed
ownership structures of U.S. firms.
c. It makes it difficult for non-U.S. firms to access credit in times of financial difficulty.
d. It results in managers focusing on short-term goals rather than on long-term objectives.
e. It reduces the involvement of stockholders in the daily operations of non-U.S. firms. - Answer
,In the United States, the most common form of business is the _____, and the form of business
that generates most of the sales and profits is the _____.
a. corporation; corporation
b. corporation; proprietorship
c. proprietorship; partnership
d. proprietorship; corporation
e. corporation; partnership - Answer d. proprietorship; corporation
The 11 sections (titles) in the Sarbanes-Oxley Act of 2002 _____.
a. require corporations to payout all the earnings as dividends
b. establish standards for accountability and responsibility in reporting financial information
c. allow management to take actions resulting in large gains to them and losses to stockholders
d. allow management to use confidential information for personal gains
e. require stockholders to make capital structure decisions - Answer b. establish standards for
accountability and responsibility in reporting financial information
Industrial groups that exist in foreign countries are _____.
a. owned and managed by the Securities and Exchange Commission
b. organizations that tie together all the functions of production and sales from start to finish
c. organizations that encompass firms involved in financing and marketing only
d. privately held companies and the stock of such firms are not traded publicly
e. led by the firm involved with manufacturing and distribution of products - Answer b.
organizations that tie together all the functions of production and sales from start to finish
Which of the following is true of corporations that operate in several different countries?
a. A nation may expropriate the assets of multinational corporations without compensation.
b. Differences in legal systems of host nations make it easy for executives trained in one country
to operate effectively in another.
,e. Uniformity of tax-laws across different nations result in proper coordination and control of
subsidiaries. - Answer a. A nation may expropriate the assets of multinational corporations
without compensation.
Because financial institutions in other countries are generally less regulated than those in the
United States, they generally _____.
a. invest in less socially responsible companies than U.S. banks
b. can provide businesses a greater variety of services than U.S. banks can
c. invest to minimize investment corporations' losses
d. can provide investment opportunities in illegal business plans also
e. are required to fulfill the regulations of the Sarbanes-Oxley Act - Answer b. can provide
businesses a greater variety of services than U.S. banks can
Which of the following is true of financial services provided by persons working in banks,
insurance companies, and brokerage firms?
a. Persons working in banks, insurance companies, and brokerage firms help corporations to
decide the types of securities to be issued to finance plant expansion.
b. Persons working in banks, insurance companies, and brokerage firms help individuals and
companies determine how to invest money to achieve their financial goals.
c. Persons working in banks, insurance companies, and brokerage firms help corporations fulfill
the regulations required by the Sarbanes-Oxley Act.
d. Persons working in banks, insurance companies, and brokerage firms help public corporations
follow environment-friendly practices.
e. Persons working in banks, insurance companies, and brokerage firms help corporations in
framing their bylaws. - Answer b. Persons working in banks, insurance companies, and
brokerage firms help individuals and companies determine how to invest money to achieve
their financial goals.
Which of the following is true of shareholders in continental Europe?
a. The stocks of corporations are widely dispersed among a large number of different investors,
both individuals and institutions.
b. Many shareholders assign banks their proxy votes for the directors of the companies.
, The treasurer of a company is a key subordinate of the _____.
a. controller
b. financial vice president
c. chief executive officer
d. credit manager
e. director of capital budgeting - Answer b. financial vice president
Incentive compensation plans are used to attract and retain top managerial talent as well as to
align the interests of management with shareholders.
a. True
b. False - Answer a. True
The accounting and tax departments are the responsibility of the _____.
a. treasurer
b. inventory manager
c. director of capital budgeting
d. vice president of finance
e. controller - Answer e. controller
No firm can take cost-increasing, socially responsible actions in a competitive marketplace and
expect to continue to effectively compete, even if those cost-increasing actions yield significant
benefits to the firm.
a. True
b. False - Answer b. False
Which of the following statements is correct?
Management FINAL EXAM QUESTIONS
AND ANSWERS RATED A+(2025-2026)
EDITION.
The term multinational corporation is used to describe a firm that operates in two or more
countries.
True or False - Answer True
Which of the following represents a difference between an S corporation and a limited liability
company(LLC)?
a. An S corporation can have more than one type of stock outstanding, whereas an LLC can have
only one type of stock outstanding.
b. An S corporation can choose to be taxed as a corporation or as a partnership, whereas an LLC
is taxed as a corporation only.
c. An S corporation is subject to unlimited personal liability of the owners, whereas an LLC is
subject to limited personal liability.
d. An S corporation has no more than 100 stockholders, whereas an LLC can have more than
100 stockholders (members).
e. An S corporation's business income is subject to double taxation, whereas an LLC's business
income is taxed only once. - Answer d. An S corporation has no more than 100 stockholders,
whereas an LLC can have more than 100 stockholders (members).
Which of the following is true of the greater concentration of ownership in non-U.S. firms than
in U.S. firms?
a. It makes it easy to change managers in non-U.S. firms.
b. It permits greater monitoring and control by individuals or groups than the more dispersed
ownership structures of U.S. firms.
c. It makes it difficult for non-U.S. firms to access credit in times of financial difficulty.
d. It results in managers focusing on short-term goals rather than on long-term objectives.
e. It reduces the involvement of stockholders in the daily operations of non-U.S. firms. - Answer
,In the United States, the most common form of business is the _____, and the form of business
that generates most of the sales and profits is the _____.
a. corporation; corporation
b. corporation; proprietorship
c. proprietorship; partnership
d. proprietorship; corporation
e. corporation; partnership - Answer d. proprietorship; corporation
The 11 sections (titles) in the Sarbanes-Oxley Act of 2002 _____.
a. require corporations to payout all the earnings as dividends
b. establish standards for accountability and responsibility in reporting financial information
c. allow management to take actions resulting in large gains to them and losses to stockholders
d. allow management to use confidential information for personal gains
e. require stockholders to make capital structure decisions - Answer b. establish standards for
accountability and responsibility in reporting financial information
Industrial groups that exist in foreign countries are _____.
a. owned and managed by the Securities and Exchange Commission
b. organizations that tie together all the functions of production and sales from start to finish
c. organizations that encompass firms involved in financing and marketing only
d. privately held companies and the stock of such firms are not traded publicly
e. led by the firm involved with manufacturing and distribution of products - Answer b.
organizations that tie together all the functions of production and sales from start to finish
Which of the following is true of corporations that operate in several different countries?
a. A nation may expropriate the assets of multinational corporations without compensation.
b. Differences in legal systems of host nations make it easy for executives trained in one country
to operate effectively in another.
,e. Uniformity of tax-laws across different nations result in proper coordination and control of
subsidiaries. - Answer a. A nation may expropriate the assets of multinational corporations
without compensation.
Because financial institutions in other countries are generally less regulated than those in the
United States, they generally _____.
a. invest in less socially responsible companies than U.S. banks
b. can provide businesses a greater variety of services than U.S. banks can
c. invest to minimize investment corporations' losses
d. can provide investment opportunities in illegal business plans also
e. are required to fulfill the regulations of the Sarbanes-Oxley Act - Answer b. can provide
businesses a greater variety of services than U.S. banks can
Which of the following is true of financial services provided by persons working in banks,
insurance companies, and brokerage firms?
a. Persons working in banks, insurance companies, and brokerage firms help corporations to
decide the types of securities to be issued to finance plant expansion.
b. Persons working in banks, insurance companies, and brokerage firms help individuals and
companies determine how to invest money to achieve their financial goals.
c. Persons working in banks, insurance companies, and brokerage firms help corporations fulfill
the regulations required by the Sarbanes-Oxley Act.
d. Persons working in banks, insurance companies, and brokerage firms help public corporations
follow environment-friendly practices.
e. Persons working in banks, insurance companies, and brokerage firms help corporations in
framing their bylaws. - Answer b. Persons working in banks, insurance companies, and
brokerage firms help individuals and companies determine how to invest money to achieve
their financial goals.
Which of the following is true of shareholders in continental Europe?
a. The stocks of corporations are widely dispersed among a large number of different investors,
both individuals and institutions.
b. Many shareholders assign banks their proxy votes for the directors of the companies.
, The treasurer of a company is a key subordinate of the _____.
a. controller
b. financial vice president
c. chief executive officer
d. credit manager
e. director of capital budgeting - Answer b. financial vice president
Incentive compensation plans are used to attract and retain top managerial talent as well as to
align the interests of management with shareholders.
a. True
b. False - Answer a. True
The accounting and tax departments are the responsibility of the _____.
a. treasurer
b. inventory manager
c. director of capital budgeting
d. vice president of finance
e. controller - Answer e. controller
No firm can take cost-increasing, socially responsible actions in a competitive marketplace and
expect to continue to effectively compete, even if those cost-increasing actions yield significant
benefits to the firm.
a. True
b. False - Answer b. False
Which of the following statements is correct?
