Managerial finance:
1) Which of the following legal forms of organization is characterized by limited liability?
a. Professional partnership
b. Sole proprietorship
c. Corporation
d. Partnership
2) The financial manager may be responsible for any of the following EXCEPT
a. keeping track of quarterly tax payments.
b. analyzing quarterly budget and performance reports.
c. analyzing the effects of more debt on the fi rm’s capital structure.
d. determining whether to accept or reject a capital asset acquisition.
3) The financial manager’s financing decisions determine
a. both the mix and the type of assets found on the firm’s balance sheet.
b. both the mix and the type of assets and liabilities found on the firm’s balance sheet.
c. the most appropriate mix of short-term and long-term fi nancing.
d. the proportion of the firm’s earnings to be paid as dividend.
4) Wealth maximization as the goal of the fi rm implies enhancing the wealth of
a. the fi rm’s stockholders.
b. the Board of Directors.
c. the fi rm’s employees.
d. the federal government.
5) The amount earned during the accounting period on each outstanding share of common stock is called
a. common stock dividend.
b. net profi ts after taxes.
c. earnings per share.
d. net income.
6) Cash flow and risk are the key determinants in share price. Increased cash flow results in ________, other things remaining the same.
a. an unchanged share price
b. a lower share price
c. an undetermined share price
d. a higher share price
7) A more recent issue that is causing major problems in the business community is
a. short-term versus long-term fi nancial goals of management.
b. the privatization of ownership.
c. ethical problems.
d. environmental concerns.
8) The implementation of a pro-active ethics program is expected to result in
a. a positive corporate image and increased respect, but is not expected to affect cash flows.
b. a positive corporate image and increased respect, but is not expected to affect share price.
c. an increased share price resulting from a decrease in risk, but is not expected to affect cash fl ows.
d. a positive corporate image and increased respect, a reduction in risk, and enhanced cash flow resulting in an increase in share price.
9) The Sarbanes-Oxley Act of 2002 was passed in response to
a. the decline in technology stocks.
b. insider trading activities.
c. false disclosures in fi nancial reporting.
d. all of the above
10) The key participants in fi nancial transactions are individuals, businesses, and governments. Individuals are net ________ of funds, and businesses are net ________ of funds.
a. demanders; suppliers
b. purchasers; sellers
c. suppliers; demanders
d. users; providers