1) Which of the following categories of owners have limited liability?
A. General partners
B. Sole proprietors
C. Shareholders of a corporation
D. Both a and b
2) In terms of organizational costs, which of the following sequences is correct, moving from lowest to highest cost?
A. General partnership, sole proprietorship, limited partnership, corporation
B. Corporation, limited partnership, general partnership, sole proprietorship
C. Sole proprietorship, general partnership, corporation, limited partnership
D. Sole proprietorship, general partnership, limited partnership, corporation
3) Which of the following best describes the goal of the firm?
A. The maximization of the total market value of the firm's common stock]
B. Profit maximization
C. Risk minimization
D. None of the above
4) When public corporations decide to raise cash in the capital markets, what type of financing vehicle is most favored?
A. Retained earnings
B. Common stock
C. Corporate bonds
D. Preferred stock
5) Money market instruments include:
A. bankers' acceptances.
B. corporate bonds.
C. common stock.
D. preferred stock.
6) Which of the following would increase the need for external equity?
A. Inadequate investment opportunities
B. A reduction in corporate profits
C. A seasonal reduction in sales revenues
D. A slow-down in economic growth