2023 Unit 4: Midterm Exam: FI360DLCF2A2023 Financial
Management
Unit 4: Midterm Exam
Due 11:59pm Points 120 Questions 30
Time Limit 90 Minutes
Instructions
Directions
The midterm exam covers material from week one through week three (Chapters
1 through 5). The exam consists of 30 multiple choice questions.
You will have 90 minutes to complete the
midterm exam. You are only able to take the
exam once.
The exam is open textbook and open
notes. The exam is not proctored.
Due Date:
Submit the exam by 11:59 pm, on Sunday of Unit 4, CT.
Attempt History
Attempt Time Score
LATEST Attempt 1 82 minutes 116 out of 120
Correct answers will be available on Nov 16 at
12am. Score for this quiz: 116 out of 120
Submitted at 10:25am
This attempt took 82
minutes.
Question 1 pts
Which of the following statements is CORRECT?
1/2
,2023 Unit 4: Midterm Exam: FI360DLCF2A2023 Financial
Management
Since bondholders receive fixed payments, they do not share in
the gains if risky projects turn out to be highly successful.
However, they do share in the losses if risky projects fail and
drive the firm into bankruptcy. Therefore, bondholders generally
prefer to see corporate managers invest in low risk/low return
projects rather than high risk/high return projects.
Because bankruptcy requires that corporate bondholders be
paid in full before stockholders receive anything, bondholders
generally prefer to see corporate managers invest in high
risk/high return projects rather than low risk/low return projects.
One advantage of operating a business as a corporation is
that stockholders can deduct their pro rata share of the taxes
the firm pays, thereby eliminating the double taxation
investors would face in a partnership.
One drawback of forming a corporation is that you lose the
limited liability that you would otherwise receive as a proprietor.
Potential conflicts between stockholders and bondholders are
increased if a firm's bonds are convertible into its common
stock.
Incorrect Question 2 pts
Multiple Choice: Conceptual
Please note that some of the answer choices, or answers that are very close, are used
in different questions. This has caused us no difficulties, but please take this into
account when you make up exams.
2/2
, 2023 Unit 4: Midterm Exam: FI360DLCF2A2023 Financial
Management
Which of the following statements is CORRECT?
One of the disadvantages of incorporating your business is that
you could become subject to the firm's liabilities in the event of
bankruptcy.
In any partnership, every partner has the same rights,
privileges, and liability exposure as every other partner.
Proprietorships and partnerships generally have a tax
advantage over corporations.
Corporations of all types are subject to the corporate
income tax. Proprietorships are subject to more
regulations than corporations.
Rationale:
Some corporations (S corporations) are able to avoid the corporate
income tax. Proprietorships and partnerships pay personal income
tax, but they avoid the corporate income tax.
Question 3 pts
3/2
Management
Unit 4: Midterm Exam
Due 11:59pm Points 120 Questions 30
Time Limit 90 Minutes
Instructions
Directions
The midterm exam covers material from week one through week three (Chapters
1 through 5). The exam consists of 30 multiple choice questions.
You will have 90 minutes to complete the
midterm exam. You are only able to take the
exam once.
The exam is open textbook and open
notes. The exam is not proctored.
Due Date:
Submit the exam by 11:59 pm, on Sunday of Unit 4, CT.
Attempt History
Attempt Time Score
LATEST Attempt 1 82 minutes 116 out of 120
Correct answers will be available on Nov 16 at
12am. Score for this quiz: 116 out of 120
Submitted at 10:25am
This attempt took 82
minutes.
Question 1 pts
Which of the following statements is CORRECT?
1/2
,2023 Unit 4: Midterm Exam: FI360DLCF2A2023 Financial
Management
Since bondholders receive fixed payments, they do not share in
the gains if risky projects turn out to be highly successful.
However, they do share in the losses if risky projects fail and
drive the firm into bankruptcy. Therefore, bondholders generally
prefer to see corporate managers invest in low risk/low return
projects rather than high risk/high return projects.
Because bankruptcy requires that corporate bondholders be
paid in full before stockholders receive anything, bondholders
generally prefer to see corporate managers invest in high
risk/high return projects rather than low risk/low return projects.
One advantage of operating a business as a corporation is
that stockholders can deduct their pro rata share of the taxes
the firm pays, thereby eliminating the double taxation
investors would face in a partnership.
One drawback of forming a corporation is that you lose the
limited liability that you would otherwise receive as a proprietor.
Potential conflicts between stockholders and bondholders are
increased if a firm's bonds are convertible into its common
stock.
Incorrect Question 2 pts
Multiple Choice: Conceptual
Please note that some of the answer choices, or answers that are very close, are used
in different questions. This has caused us no difficulties, but please take this into
account when you make up exams.
2/2
, 2023 Unit 4: Midterm Exam: FI360DLCF2A2023 Financial
Management
Which of the following statements is CORRECT?
One of the disadvantages of incorporating your business is that
you could become subject to the firm's liabilities in the event of
bankruptcy.
In any partnership, every partner has the same rights,
privileges, and liability exposure as every other partner.
Proprietorships and partnerships generally have a tax
advantage over corporations.
Corporations of all types are subject to the corporate
income tax. Proprietorships are subject to more
regulations than corporations.
Rationale:
Some corporations (S corporations) are able to avoid the corporate
income tax. Proprietorships and partnerships pay personal income
tax, but they avoid the corporate income tax.
Question 3 pts
3/2
