Corporate Finance-Quiz1

What is corporation?

• legal entity that separate from its owner

• legal entity that have only 1 owner

• legal entity that have few owners

• legal entity with limited partnership

Which is NOT types of firms?

• Sole Proprietorship

• Limited Liability Companies

• Ownership

• Partnership

Capital budgeting decisions are used to determine how to raise the cash necessary for investments.

• True

• False

The term of capital structure refers to:

• the mix of long-term debt and equity financing.

• the length of time needed to repay debt.

• the type of assets a firm acquires.

• is part of making investment decision.

A ____________ would be an example of a principal, while a ___________ would be an example of an agent, in agency theory.

• shareholder and manager

• shareholder and bondholders

• manager and employee

• None of the above

The __________ function focuses on raising capital to support a company's operations and investment programs.

• financing

• capital budgeting

• corporate governance

• risk management

The primary goal of a publicly-owned corporation should be to:

• minimizing risk

• maximizing profit

• maximizing shareholders' wealth

• minimizing market share

A conflict of interest between the stockholders and management of a firm is called:

• stockholders' liability.

• corporate breakdown.

• the agency problem.

• legal liability.

The Chief Executive Officer typically reports to the

• Board of Director’s

• President

• CFO

• None of the above

Who runs the company operations for large companies?

• Shareholders

• Board of Directors

• External auditors

• Stakeholders