Corporate Finance Questions and Correct Answers & Latest Updated
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Module
Corporate Finance
Institution
Corporate Finance
Financial managers should strive to maximize the current value per share of the existing
stock because:
o :## the current stockholders are the owners of the corporation.
Which one of the following actions by a financial manager creates an agency problem?
o :## agreeing to expand the company at...
Corporate Finance Questions and Correct Answers & Latest Updated
Financial managers should strive to maximize the current value per share of the existing
stock because:
o :## the current stockholders are the owners of the corporation.
Which one of the following actions by a financial manager creates an agency problem?
o :## agreeing to expand the company at the expense of stockholders' value
Which of the following are disadvantages of a partnership?
I. limited life of the firm
II. personal liability for firm debt
III. greater ability to raise capital than a sole proprietorship
IV. difficulty involved in transferring partnership interest
o :## I, II, and IV
The person generally directly responsible for overseeing the cash and credit functions,
financial planning, and capital expenditures is the:
o :## treasurer
The rules by which corporations govern themselves are called:
o :## bylaws
Master01: DO NOT COPY AND PASTE!! August 25, 2024 Latest Update
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A business entity operated and taxed like a partnership, but with limited liability for the
owners, is called a:
o :## limited liability company.
Which form of business structure faces the greatest agency problems?
o :## corporation
The corporate document that sets forth the business purpose of a firm is the:
o :## articles of incorporation.
Which one of the following is a capital budgeting decision?
o :## deciding whether or not to open a new store
Working capital management:
o :## is concerned with the upper portion of the balance sheet
The treasurer and the controller of a corporation generally report to the:
o :## CFO
Which one of the following business types is best suited to raising large amounts of capital?
o :## corporation
A business created as a distinct legal entity composed of one or more individuals or entities
is called a:
Master01: DO NOT COPY AND PASTE!! August 25, 2024 Latest Update
,3|Page: 2024/2025 Grade A+
o :## corporation
The mixture of debt and equity used by a firm to finance its operations is called:
o :## capital structure
Managers are encouraged to act in shareholders' interests by:
o :## shareholder election of a board of directors who select management.
the threat of a takeover by another firm.
compensation contracts that tie compensation to corporate success.
The articles of incorporation:
o :## set forth the number of shares of stock that can be issued
Which of the following help convince managers to work in the best interest of the
stockholders?
o :## I. compensation based on the value of the stock
II. stock option plans
III. threat of a proxy fight
A general partner:
o :## has more management responsibility than a limited partner.
Which of the following are key requirements of the Sarbanes-Oxley Act?
Master01: DO NOT COPY AND PASTE!! August 25, 2024 Latest Update
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I. Officers of the corporation must review and sign annual reports.
II. Officers of the corporation must now own more than 5% of the firm's stock.
III. Annual reports must list deficiencies in internal controls
IV. Annual reports must be filed with the SEC within 30 days of year end.
o :## I and III
Which one of the following statements is correct concerning corporations?
o :## The largest firms are usually corporations
Which of the following are advantages of the corporate form of business ownership?
I. limited liability for firm debt
II. double taxation
III. ability to raise capital
IV. unlimited firm life
o :## I, III, and IV only
Which one of the following statements is correct concerning the organizational structure of
a corporation?
o :## The chief executive officer reports to the board of directors.
Which of the following may be found on the balance sheet?
o :## Assets
Liabilities
Master01: DO NOT COPY AND PASTE!! August 25, 2024 Latest Update
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