Question details

Which one of the following statements correctly applies
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FIN2105 Financial Management

Exam #1 Review Questions & Answers

S. Sacco

Each question is

worth 3.0

points.

1. Which one of the

following statements

correctly applies to a

sole proprietorship?

A.

The business entity has an

unlimited life.

B.

The ownership can easily be

transferred to another individual.

C.

The owner enjoys limited liability

for the firm's debts.

D.

Debt financing is easy to arrange

in the firm's name.

E.

Obtaining additional equity is

dependent on the owner's

personal finances.

2. A corporation:

A.

is ultimately controlled by the

government.

B.

is a legal entity separate

from its owners.

C.

is prohibited from entering into

contractual agreements.

D.

has its identity defined by its

bylaws.

E.

has its existence regulated by the

rules set forth in its charter.

3. The primary goal of

financial management

is to maximize which

one of the following

for a corporation?

A.

Current

profits

1

 

 

 

FIN2105 Financial Management

Exam #1 Review Questions & Answers

S. Sacco

B.

Market

share

C.

Number of shares

outstanding

D.

Market value of

the firm

E.

Revenue

growth

4. Which one of the

following situations is

most apt to create an

agency conflict?

A.

Compensating a manager based

on his or her division's net

income

B.

Giving all employees a bonus if a

certain level of efficiency is

maintained

C.

Hiring an independent consultant

to study the operating efficiency

of the firm

D.

Investors reject a project that

is profitable and protects

employee jobs

E.

Selling an unprofitable segment

of the firm

2

 

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