FINA 3770
1. Which of the following mechanisms can help align the d. all of the above
behavior of managers with the goal of stockholders?
a. well designed management compensation
b. managerial labor market
c. An independent Board of Directors
d. all of the above
2. Which of the following is/are advantages of the corpo- b. greater access to capital
rate form of organization? markets.
a. Reduced start up costs
b. greater access to capital markets.
c. unlimited liability
d. single taxation
3. which of the following is a stakeholder? d. all of the above
a. an employee
b. a lender
c. the IRS
d. all of the above
4. Which of the following is a basic source for funds for d. both debt and equity
a firm?
a. debt
b. equity
c. asset liquidations
d. both debt and equity
5. The capital budgeting decision process can be de- c. which productive assets
scribed as a firm should purchase.
, FINA 3770
a. how a firm's day-to-day financial matters should be
managed
b. how a firm should finance its assets
c. which productive assets a firm should purchase
d. all of the above
6. which of the following business organizational forms d. both sole proprietor-
create(s) a tax liability on income at the personal in- ship and partnership
come tax rate?
a. sole proprietorship
b. partnership
c. corporation
d. both sole proprietorship and partnership
7. which of the following types of owners cannot be en- c. a limited partner
gaged in managing the business?
a. a sole proprietor
b. a general partner
c. a limited partner
d. none of the above
8. Which form(s) of business organization generate(s) c. corporation
the majority of business revenue and profits in the
United States?
a. sole proprietorship
b. partnership
c. corporation
d. both sole proprietorship and partnership
, FINA 3770
9. Which of the following organizational forms is subject d. public Corporation
to the Securities and Exchange Commission (SEC) reg-
ulations?
a. private coporation
b. partnership
c. sole proprietorship
d. public coporation
10. Which of the following is primarily responsible for c. CFO
managing all financial aspects of a firm?
a. CEO
b. board of directors
c. CFO
d. audit committee
11. From the owner's perspective, which of the following a. stockholders' wealth
should be the goal of a firm? maximization
a. stockholders' wealth maximization
b. profit maximization
c. revenue maximization
d. tax minimization
12. which of the following factors or activities can be con- a. capital budgeting
trolled by a firm's managers?
a. capital budgeting
b. stock market conditions
c. the level of market interest rates
d. the level of economic activity
, FINA 3770
13. When analyst and investors determine the value of a d. all of the above.
firm's stock, they should consider:
a. the size of the expected cash flows associated with
owning the stock.
b. the timing of the cash flows
c. the riskiness of the cash flows.
d. all of the above
14. Who among the following is the "principal" in the b. a stockholder holding
agency relationship of a corporation? 10% or more of any class
of voting stock
a. the board of directors
b. a stockholder holding 10% or more of any class of
voting stock
c. a company engineer
d. the CEO of the firm
15. An example of the agency cost is: b. a manager expensing a
large dinner on the com-
a. a manager turning down a value-contributing pro- pany expense report.
ject because of its risks.
b. a manager expensing a large dinner on the compa-
ny expense report.
c. a manager using too little debt within the firm's cap-
ital structure because of the additional risk associated
with debt.
d. all of the above
16. Societies idea of what actions are right, and wrong are a. ethics
termed as:
a. eithics
1. Which of the following mechanisms can help align the d. all of the above
behavior of managers with the goal of stockholders?
a. well designed management compensation
b. managerial labor market
c. An independent Board of Directors
d. all of the above
2. Which of the following is/are advantages of the corpo- b. greater access to capital
rate form of organization? markets.
a. Reduced start up costs
b. greater access to capital markets.
c. unlimited liability
d. single taxation
3. which of the following is a stakeholder? d. all of the above
a. an employee
b. a lender
c. the IRS
d. all of the above
4. Which of the following is a basic source for funds for d. both debt and equity
a firm?
a. debt
b. equity
c. asset liquidations
d. both debt and equity
5. The capital budgeting decision process can be de- c. which productive assets
scribed as a firm should purchase.
, FINA 3770
a. how a firm's day-to-day financial matters should be
managed
b. how a firm should finance its assets
c. which productive assets a firm should purchase
d. all of the above
6. which of the following business organizational forms d. both sole proprietor-
create(s) a tax liability on income at the personal in- ship and partnership
come tax rate?
a. sole proprietorship
b. partnership
c. corporation
d. both sole proprietorship and partnership
7. which of the following types of owners cannot be en- c. a limited partner
gaged in managing the business?
a. a sole proprietor
b. a general partner
c. a limited partner
d. none of the above
8. Which form(s) of business organization generate(s) c. corporation
the majority of business revenue and profits in the
United States?
a. sole proprietorship
b. partnership
c. corporation
d. both sole proprietorship and partnership
, FINA 3770
9. Which of the following organizational forms is subject d. public Corporation
to the Securities and Exchange Commission (SEC) reg-
ulations?
a. private coporation
b. partnership
c. sole proprietorship
d. public coporation
10. Which of the following is primarily responsible for c. CFO
managing all financial aspects of a firm?
a. CEO
b. board of directors
c. CFO
d. audit committee
11. From the owner's perspective, which of the following a. stockholders' wealth
should be the goal of a firm? maximization
a. stockholders' wealth maximization
b. profit maximization
c. revenue maximization
d. tax minimization
12. which of the following factors or activities can be con- a. capital budgeting
trolled by a firm's managers?
a. capital budgeting
b. stock market conditions
c. the level of market interest rates
d. the level of economic activity
, FINA 3770
13. When analyst and investors determine the value of a d. all of the above.
firm's stock, they should consider:
a. the size of the expected cash flows associated with
owning the stock.
b. the timing of the cash flows
c. the riskiness of the cash flows.
d. all of the above
14. Who among the following is the "principal" in the b. a stockholder holding
agency relationship of a corporation? 10% or more of any class
of voting stock
a. the board of directors
b. a stockholder holding 10% or more of any class of
voting stock
c. a company engineer
d. the CEO of the firm
15. An example of the agency cost is: b. a manager expensing a
large dinner on the com-
a. a manager turning down a value-contributing pro- pany expense report.
ject because of its risks.
b. a manager expensing a large dinner on the compa-
ny expense report.
c. a manager using too little debt within the firm's cap-
ital structure because of the additional risk associated
with debt.
d. all of the above
16. Societies idea of what actions are right, and wrong are a. ethics
termed as:
a. eithics
