FNAN 522 Midterm Exam

FNAN 522 Midterm Exam A company needs to raise cash to cover its operating expenses. The company will only need the funds for a short period of time. What financial market is the most appropriate for the company to use to raise money (that is, likely the lowest cost and best-matched maturity)? - A. Money market. B. Capital Market C. Derivative market D. All of the above Answer: A MONEY MARKET What is the primary goal of the Sarbanes-Oxley act according to the Module 1 video-"The Goal of Financial Management"? - a. To protect investors from corporate abuse. b. To help maintain a primary bull market. c. To protect corporate executives from frivolous shareholder lawsuits. d. To prevent a secular bear market. ANSWER: a. To protect investors from corporate abuse. Which of the following is an accurate characteristic of a sole proprietorship? - a. The owner is personally liable for the business's debt and obligations. b. There is more than one answer. c. A sole proprietorship typically elects board members for staggered terms. d. The owner must file for a separate tax return for the business. ANSWER: a. The owner is personally liable for the business's debt and obligations. Which of the following is a source of agency costs in an organization? - a. Parties associates with the organization have different risk preferences. b. The people who make the day-to-day decisions are not the owners. c. All of these answers. d. The managers of the organization have different objectives than the other shareholders. ANSWER: c. All of these answers. Which of the following occurred during the financial crisis of ? - a. All of these answers. b. Several major institutions failed or were subject to government takeover. c. A currency crisis, with investors transferring their wealth to countries with stronger currencies. d. Significant declines in consumer wealth and prolonged unemployment. ANSWER: A. All of these answers. Which of the following terms describes the protection of personal assets stemming from the corporate structure? - a. simple transference b. double taxation c. articles of incorporation d. limited liability ANSWER: D. Limited Liability