Fundamentals of Financial Management verified

Fundamentals of Financial Management verified In most corporations, the CFO ranks under the CEO. a. True b. False - ANSWER: True One advantage of the corporate form of organization is that it avoids double taxation. a. True b. False - ANSWER: False For a stock to be in equilibrium as the book defines it, its market price should exceed its intrinsic value. a. True b. False - ANSWER: False In order to maximize its shareholders' value, a firm's management must attempt to maximize the stock price in the long run, or the stock's "intrinsic value." a. True b. False - ANSWER: True One danger of starting a proprietorship is that you may be exposed to personal liability if the business goes bankrupt. This problem would be avoided if you formed a corporation to operate the business. a. True b. False - ANSWER: True Which of the following statements is CORRECT? a. One advantage of forming a corporation is that equity investors are usually exposed to less liability than they would be in a partnership. b. Corporations face fewer regulations than proprietorships. c. One disadvantage of operating a business as a proprietor is that the firm is subject to double taxation, because taxes are levied at both the firm level and the owner level. d. It is generally less expensive to form a corporation than a proprietorship because, with a proprietorship, extensive legal documents are required. e. If a partnership goes bankrupt, each partner is exposed to liabilities only up to the amount of his or her investment in the business. - a. One advantage of forming a corporation is that equity investors are usually exposed to less liability than they would be in a partnership.