Exam (elaborations)
FIN 310 Exam 1 Questions And Answers Latest Update
- Module
- FIN 310
- Institution
- American Intercontinental University (AIU)
FIN 310 Exam 1 Questions And Answers Latest Update
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Solution 2024/2025Pepper
FIN 310 Exam 1 Questions And Answers Latest
Update
Which of the following statements is false?
-Financial managers make three basic types of decisions: capital budgeting,
capital structure, and working capital management
-Capital budgeting is the process of planning and managing a firm's short
term investments
-The primary goal for corporate managers should be to make good decisions
to maximize the market value of the owner's equity
-Agency conflicts, which sometimes arise when CEOs are overly motivated
to seek job security, can be reduced by adjusting managerial compensation
ANS✔✔ B
Which of the following statements is true?
-In a sole proprietorship, the owner has limited liability and full control
-In a partnership, ownership can be transferred quickly, and capital can be
raised easily
-Corporations face double taxation, meaning the corporation pays taxes on
income before dividends, while the owners pay personal taxes on dividends
and capital gains
-Intended to improve public disclosures, the Sarbanes-Oxley Act has likely
increased the number of small companies going public in the USA ANS✔✔ C
, Solution 2024/2025
Pepper
Managers should act int he shareholders' interest because shareholders
have ___ priority in receiving their claims
-Top
-Somewhere in the middle
-Bottom
-Equal (to those of all other stakeholders) ANS✔✔ C
Which of the following is NOT an effective means of aligning management
goals with shareholder interests?
-Employee stock options
-Threat of a takeover
-Management bonuses tied to performance goals
-Compensating managers with salaries significantly higher than their peers
ANS✔✔ D
Which of the following statements is false?
-Liquidity measures the speed and ease with which assets can be converted
to cash without significant loss of value, and "fortress" balance sheets are
especially liquid
-Even though depreciation is not a cash expense, it affects taxes, and
corporations prefer to depreciate assets using accelerated over straight line
methods for tax purposes
-The marginal tax rate is the tax rate payable on the next dollar earned and
is always higher than the average tax rate
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