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    Chapter 1

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    Nguyễn Thùy Linh
    This document provides an introduction to corporate finance concepts through a series of multiple choice questions. It covers topics such as different types of business organizations (corporations, sole proprietorships, partnerships), shareholders and their role, financial managers and the decisions they make (borrowing, equipment acquisition), cash flows, financial intermediaries, risk management, and forms of business organization. The overall purpose is to introduce foundational corporate finance concepts.

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    Chapter 1

    Uploaded by

    Nguyễn Thùy Linh
    61 views2 pages
    This document provides an introduction to corporate finance concepts through a series of multiple choice questions. It covers topics such as different types of business organizations (corporations, sole proprietorships, partnerships), shareholders and their role, financial managers and the decisions they make (borrowing, equipment acquisition), cash flows, financial intermediaries, risk management, and forms of business organization. The overall purpose is to introduce foundational corporate finance concepts.

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    This document provides an introduction to corporate finance concepts through a series of multiple choice questions. It covers topics such as different types of business organizations (corporations, sole proprietorships, partnerships), shareholders and their role, financial managers and the decisions they make (borrowing, equipment acquisition), cash flows, financial intermediaries, risk management, and forms of business organization. The overall purpose is to introduce foundational corporate finance concepts.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    61 views2 pages

    Chapter 1

    Uploaded by

    Nguyễn Thùy Linh
    This document provides an introduction to corporate finance concepts through a series of multiple choice questions. It covers topics such as different types of business organizations (corporations, sole proprietorships, partnerships), shareholders and their role, financial managers and the decisions they make (borrowing, equipment acquisition), cash flows, financial intermediaries, risk management, and forms of business organization. The overall purpose is to introduce foundational corporate finance concepts.

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    © All Rights Reserved
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    CHAPTER 1: INTRODUCTION TO CORPORATE FINANCE

    1. A business owned by a several individuals who have limited liability for its debt is called a:
    A. corporation. B. sole proprietorship. C. general partnership. D. limited liability company
    2. A business partner whose potential financial loss in the partnership will not exceed his or her
    investment in that partnership is called a:
    A. generally partner B. sole proprietor C. limited partner D. corporate shareholder
    3. A shareholder is:
    A. any person who has voting rights and receive dividends based on stock ownership of a corporation.
    B. a person who initially founded a firm and currently has management control over that firm.
    C. a creditor to whom a firm currently owes money.
    D. none of the above.
    4. A stakeholder is:
    A. any person who has voting rights and receive dividends based on stock ownership of a corporation.
    B. a person who initially founded a firm and currently has management control over that firm.
    C. a creditor to whom a firm currently owes money.
    D. none of the above.
    5. Which of the following questions are addressed by financial managers?
    I. How should a product be marketed?
    II. Should customers be given 30 or 45 days to pay for their credit purchases?
    III. Should the firm borrow more money?
    IV. Should the firm acquire new equipment?
    A. II and III only B. I, II, and III only C. II, III, and IV only D. I, II, III, and IV
    6. Which one of the following statements concerning a sole proprietorship is correct?
    A. The life of a sole proprietorship is potentially unlimited.
    B. A sole proprietor can generally raise large sums of capital quite easily.
    C. Transferring ownership of a sole proprietorship is easier than transferring ownership of a corporation.
    D. It is not easy to create a sole proprietorship.
    7. Decisions made by financial managers should primarily focus on increasing which one of the
    following?
    A. size of the firm
    B. growth rate of the firm
    C. market value per share of outstanding stock
    D. total sales.
    8. Which of the following represent cash outflows from a corporation?
    I. issuance of securities
    II. payment of dividends
    III. Net profits
    IV. payment of salaries/wages
    A. II and IV only B. II and IV only C. I, II, and IV only D. II, III, and IV only
    9. Which of the following are not a financial intermediary?
    A. Insurance companies
    B. Banks
    C. Brokers
    D. Government
    10. Which of the following could be an investor?
    A. Insurance companies
    B. Banks
    C. Government
    D. All the above
    11. The limited partners in a limited partnership:
    A. are taxed as if the partnership was a general partnership.
    B. have limited liability.
    C. must be involved in the day to day management of the firm.
    D. answers a and b are both correct.
    12. An agent of the firm is:
    A. any supplier of services to the firm.
    B. any manager who owns less than 100% of the firm.
    C. any outside entity that supplies a product to the firm.
    D. none of the above.
    13. Which career path will lead to serving the needs of a bank's customers?
    A. investment banking B. Commercial banking C. corporate finance D. investment analysis
    14. Risk management encompasses:
    A. the management of acts of nature which the firm may be exposed to.
    B. the management of the firms hedgeable financial risks.
    C. the management of the firms exposure to foreign currency fluctuations.
    D. all of the above.
    15. Which legal form of business organization offers the greatest protection to all of the owners of the firm
    in the event that the firm has a legal judgement against it?
    A. sole proprietorship
    B. limited partnership
    C. corporation
    D. all of the above provide the same protection
    16. Which of the following is the most beneficial form of business that is in the start-up of phase of its
    business when it anticipates net losses for the next few years?
    A. Corporation
    B. Partnership
    C. limited partnership
    D. answers b and c are both correct
    17. The Sarbanes-Oxley Act of 2002 prevents a publicly traded U.S. corporation's auditors from:
    A. providing consulting services.
    B. providing advisory services.
    C. providing valuation services.
    D. all of the above.
    18. Which of the following is what managers should be trying to do for the firm?
    A. Maximize revenue
    B. Minimize expenses.
    C. Maximize shareholder wealth.
    D. Maximize the current period's net income.
    19. Which form of capital is expected to remain permanently invested in the firm?
    A. debt capital B. equity capital C. Human capital D. political capital
    20. The financial position within a company that is typically responsible for formulating and
    implementing an integrated financial plan for a company or a division is:
    A. the assistant treasurer.
    B. the cash manager.
    C. the controller.
    D. the capital budgeting analyst.

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