Introduction to Finance

From a financial point of view, a company that decides to develop new product is making

• a financing decision

• an investment decision

• a capital structure decision

• a cash flow decision

Working capital management refers to

• long-term financing decisions

• the management of cash flows

• investing in product development

• capital structure

The personal decision to take a year off from work to obtain a graduate degree in business is primarily a(n)_________ decision

• social

• financial

• ethical

• investment

Which one of the following is NOT an advantage of the sole proprietorship?

• limited liability

• no time limit imposed on its existence

• no legal requirements for starting the business

• none of the above

The true owners of the corporation are the

• holders of debt issues of the firm

• preferred stockholders

• board of directors of the firms

• common stockholders

Which of the following categories of owners enjoys limited liability?

• General partners in a limited partnership or limited liability company

• Shareholders (common stock) of a corporation

• Sole proprietorship

• None of the answers are correct

The major source of financing for corporations are

• partners contributions

• exchange between shareholders

• interest and dividends

• debt and equity

Which of the following best describe the goal of the firm

• The maximization of the total market value of the firm's common stock

• Cost minimization

• Risk maximization

• None of the above

What does the agency problem refer to?

• The conflict that exists between the board of directors and the employees of the firm

• The problem associated with financial managers and internal revenue agents

• The conflict that exists between stockholders and investors

• The problem that results from potential conflict of interest between the managers of a busines and the stockholders

Serious ethical violations by corporations such as Enron led to the passage of

• The Dodd-Frank Act

• The Insider Trading Act of 1988

• The Sarbanes-Oxley Act

• All of the above