finance final exam with correct answers |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
Suppliers, customers, and employees of a corporation are called:
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A) Shareholders.
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B) Stakeholders.
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C) Debtors.|||\\\
D) Stockholders.
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E) Partners. - correct answer✔✔B) Stakeholders.
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A proprietorship is:
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A) A business formed by two or more individuals.
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B) A separate legal body formed by an individual who has limited personal liability.
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C) A business owned by an individual who has unlimited personal liability.
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D) A business managed by a single general partner.
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E) A limited liability form of business ownership. - correct answer✔✔C) A business owned by
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an individual who has unlimited personal liability.
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Conflicts that arise between the interests of managers and stockholders are referred to as:
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A) Control problems.
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B) Agency problems.
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C) Management conflicts.
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D) Stockholder conflicts.
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E) Proxy fights. - correct answer✔✔B) Agency problems
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The primary market includes:|||\\\ |||\\\ |||\\\
,A) The purchase and sale of shares of stock between two shareholders.
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B) The sale of stock by a shareholder in the open market.
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C) The sale of stock by a shareholder in an auction market.
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D) The sale of new securities by a corporation on an exchange.
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E) The sale of stock by a shareholder in the OTC market. - correct answer✔✔D) The sale of
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
new securities by a corporation on an exchange.
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Tasks related to tax management, cost accounting, financial accounting, and data processing
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are the responsibility of which corporate officer?
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A) The Corporate Treasurer
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B) The Board of Directors
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C) The Corporate Controller
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D) The Chairman of the Board
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E) The Vice President of Production - correct answer✔✔C) The Corporate Controller
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Which of the following is an answer to "What are the duties of a financial manager?"
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
I. Deciding how much interest to pay the holders of the corporation's bonds.
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II. Deciding the mix of long-term debt and equity.
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III. Deciding which projects a firm should undertake.
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IV. Deciding how much short-term debt to use.
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A) I and II only
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B) I, II, and III only
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C) II and III only
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D) II, III, and IV only
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E) I, II, III, and IV - correct answer✔✔D) II, III, and IV only
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,A financial manager is responsible for deciding whether or not new manufacturing equipment
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
should be purchased to replace existing equipment. The new equipment would reduce labor|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
expenses and would allow the firm to reduce its investment in inventory. Which of the financial |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
management areas would be involved in the decision process?
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I. Capital budgeting
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II. Capital structure management
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III. Working capital management |||\\\ |||\\\ |||\\\
A) I only |||\\\ |||\\\
B) I and II only |||\\\ |||\\\ |||\\\ |||\\\
C) II and III only |||\\\ |||\\\ |||\\\ |||\\\
D) I and III only |||\\\ |||\\\ |||\\\ |||\\\
E) I, II, and III - correct answer✔✔D) I and III only
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Which of the following is NOT considered one of the basic questions of financial management?
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A) What long-term investments should the firm choose.
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B) At what rate of interest should a firm borrow.
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C) Where will the firm get the long-term financing to pay for its investments.
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D) What mixture of debt and equity should the firm use to fund its operations.
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E) How should the firm manage its working capital, i.e., its everyday financial activities. -
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correct answer✔✔B) At what rate of interest should a firm borrow. |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
- In the evaluation of cash flow in a capital budgeting decision, which of the following must be
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
considered?
I. The size of the cash flow.
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, II. The timing of the cash flow.
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III. The risk of the cash flow.
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A) I only |||\\\ |||\\\
B) I and II only
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C) II only |||\\\ |||\\\
D) II and III only
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E) All the above - correct answer✔✔E) I, II, III
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Which of the following statements is/are false concerning partnerships?
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I. Limited partners are responsible for all debts of the partnership.
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II. Limited partners generally do not manage the partnership.
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III. In a limited partnership, all partners share equally in the gains or losses.
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A) I only |||\\\ |||\\\
B) II only |||\\\ |||\\\
C) I and II only
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D) I and III only
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E) I, II, and III - correct answer✔✔D) I and III only
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Which of the following is an advantage of ownership of a corporation compared to that of a
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sole proprietorship? |||\\\
A) The owners of the corporation have unlimited liability for the firm's debts.
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B) It is the simplest to start.
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C) The corporation has an unlimited life.
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Suppliers, customers, and employees of a corporation are called:
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
A) Shareholders.
|||\\\
B) Stakeholders.
|||\\\
C) Debtors.|||\\\
D) Stockholders.
|||\\\
E) Partners. - correct answer✔✔B) Stakeholders.
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A proprietorship is:
|||\\\ |||\\\
A) A business formed by two or more individuals.
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
B) A separate legal body formed by an individual who has limited personal liability.
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
C) A business owned by an individual who has unlimited personal liability.
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
D) A business managed by a single general partner.
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
E) A limited liability form of business ownership. - correct answer✔✔C) A business owned by
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
an individual who has unlimited personal liability.
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Conflicts that arise between the interests of managers and stockholders are referred to as:
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
A) Control problems.
|||\\\ |||\\\
B) Agency problems.
|||\\\ |||\\\
C) Management conflicts.
|||\\\ |||\\\
D) Stockholder conflicts.
|||\\\ |||\\\
E) Proxy fights. - correct answer✔✔B) Agency problems
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
The primary market includes:|||\\\ |||\\\ |||\\\
,A) The purchase and sale of shares of stock between two shareholders.
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
B) The sale of stock by a shareholder in the open market.
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
C) The sale of stock by a shareholder in an auction market.
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
D) The sale of new securities by a corporation on an exchange.
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
E) The sale of stock by a shareholder in the OTC market. - correct answer✔✔D) The sale of
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
new securities by a corporation on an exchange.
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
Tasks related to tax management, cost accounting, financial accounting, and data processing
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
are the responsibility of which corporate officer?
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
A) The Corporate Treasurer
|||\\\ |||\\\ |||\\\
B) The Board of Directors
|||\\\ |||\\\ |||\\\ |||\\\
C) The Corporate Controller
|||\\\ |||\\\ |||\\\
D) The Chairman of the Board
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\
E) The Vice President of Production - correct answer✔✔C) The Corporate Controller
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Which of the following is an answer to "What are the duties of a financial manager?"
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
I. Deciding how much interest to pay the holders of the corporation's bonds.
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
II. Deciding the mix of long-term debt and equity.
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
III. Deciding which projects a firm should undertake.
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
IV. Deciding how much short-term debt to use.
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
A) I and II only
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B) I, II, and III only
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C) II and III only
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D) II, III, and IV only
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E) I, II, III, and IV - correct answer✔✔D) II, III, and IV only
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
,A financial manager is responsible for deciding whether or not new manufacturing equipment
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
should be purchased to replace existing equipment. The new equipment would reduce labor|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
expenses and would allow the firm to reduce its investment in inventory. Which of the financial |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
management areas would be involved in the decision process?
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
I. Capital budgeting
|||\\\ |||\\\
II. Capital structure management
|||\\\ |||\\\ |||\\\
III. Working capital management |||\\\ |||\\\ |||\\\
A) I only |||\\\ |||\\\
B) I and II only |||\\\ |||\\\ |||\\\ |||\\\
C) II and III only |||\\\ |||\\\ |||\\\ |||\\\
D) I and III only |||\\\ |||\\\ |||\\\ |||\\\
E) I, II, and III - correct answer✔✔D) I and III only
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
Which of the following is NOT considered one of the basic questions of financial management?
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
A) What long-term investments should the firm choose.
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
B) At what rate of interest should a firm borrow.
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
C) Where will the firm get the long-term financing to pay for its investments.
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
D) What mixture of debt and equity should the firm use to fund its operations.
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
E) How should the firm manage its working capital, i.e., its everyday financial activities. -
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
correct answer✔✔B) At what rate of interest should a firm borrow. |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
- In the evaluation of cash flow in a capital budgeting decision, which of the following must be
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
considered?
I. The size of the cash flow.
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
, II. The timing of the cash flow.
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
III. The risk of the cash flow.
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
A) I only |||\\\ |||\\\
B) I and II only
|||\\\ |||\\\ |||\\\ |||\\\
C) II only |||\\\ |||\\\
D) II and III only
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E) All the above - correct answer✔✔E) I, II, III
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
Which of the following statements is/are false concerning partnerships?
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
I. Limited partners are responsible for all debts of the partnership.
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
II. Limited partners generally do not manage the partnership.
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
III. In a limited partnership, all partners share equally in the gains or losses.
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
A) I only |||\\\ |||\\\
B) II only |||\\\ |||\\\
C) I and II only
|||\\\ |||\\\ |||\\\ |||\\\
D) I and III only
|||\\\ |||\\\ |||\\\ |||\\\
E) I, II, and III - correct answer✔✔D) I and III only
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
Which of the following is an advantage of ownership of a corporation compared to that of a
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
sole proprietorship? |||\\\
A) The owners of the corporation have unlimited liability for the firm's debts.
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
B) It is the simplest to start.
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
C) The corporation has an unlimited life.
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