Finance Exam 1 Review Questions With Complete Solutions

Which of the following should be the primary goal pursued by the financial manager of a firm? Selected Answer: correct answer: c. Maximizing the market value of the firm's stock The treasurer of a company is a key subordinate of the _____. correct answer: a. financial vice president Which of the following statements is correct? correct answer: a. Under partnership law, if any partner is unable to meet his or her pro rata claim in the event the partnership goes bankrupt, the remaining partners must make good on the unsatisfied claims. The primary goal of a publicly-owned firm interested in serving its stockholders should be to _____. correct answer: b. maximize the stock price per share All else equal, in which of the following forms of business would the possibility of an agency problem be the greatest? correct answer: a. A U.S. corporation in which individual stockholders own extremely small proportions of the company. Which of the following is a reason for a company to go international? correct answer: b. The company is manufacturing the finished product in their country at a very high production cost. Which of the following forms of business offers limited personal liability to owners as well as the choice to be taxed as either a corporation or as a partnership? correct answer: c. Limited liability company Institutional investors can ensure that a corporation pursues goals that are in their best interest by _____. correct answer: a. monitoring its financial performance to ensure that managers pursue the goal of wealth maximization Question 9 Which of the following functions deals with the management of money? correct answer: a. Financial services