Exam (elaborations)
FIN 310 Final Exam Multiple Choice Questions And Answers Latest Update
- Module
- FIN 310
- Institution
- American Intercontinental University (AIU)
FIN 310 Final Exam Multiple Choice Questions And Answers Latest Update
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Solution 2024/2025Pepper
FIN 310 Final Exam Multiple Choice Questions
And Answers Latest Update
1.1. Which of the following statements is FALSE?
A. Financial Managers make three basic types of decisions: Capital
Budgeting, Capital Structure, and Working Capital Management.
B. Capital budgeting is the process of planning and managing a firm's short-
term investments.
C. The primary goal for corporate managers should be to make good
decisions to maximize the market value of the owner's equity.
D. Agency conflicts, which sometimes arise when CEOs are overly motivated
to seek job security, can be reduced by adjusting managerial compensation.
ANS✔✔ B
1.2. Which of the following statements is TRUE?
A. In a sole proprietorship, the owner has limited liability and full control.
B. In a partnership, ownership can be transferred quickly, and capital can be
raised easily.
C. Corporations face double taxation, meaning the corporation pays taxes
on income before dividends, while the owners pay personal taxes on
dividends and capital gains.
D. Intended to improve public disclosures, the Sarbanes-Oxley Act has likely
increased the number of small companies going public in the USA. ANS✔✔ C
1.3. Managers should act in shareholders' interests because shareholders
have ___________ priority in receiving their claims.
A. Top
, Solution 2024/2025
Pepper
B. Somewhere in the middle
C. Bottom
D. Equal (to those of all other stakeholders) ANS✔✔ C
1.4. Which of the following is NOT an effective means of aligning
management goals with shareholder interests?
A. Employee stock options
B. Threat of a takeover
C. Management bonuses tied to performance goals
D. Compensating managers with salaries significantly higher than their
peers ANS✔✔ D
1.C1. If any, which of the following statements is FALSE?
A. Capital Budgeting is the process of planning and managing a firm's long-
term investments where managers identify investments that are worth
more than they cost to acquire.
B. Capital Structure is the mix of debt and equity maintained by a firm to
finance operations, where the firm decides how much to borrow and what
the cheapest sources of funds are.
C. Working Capital Management is the day-to-day management of finances
that determines how much cash and inventory should be kept on hand,
whether to sell on credit to customers, and how to obtain short-term
financing.
D. None of the above statements is false. ANS✔✔ D
1.21. Which of the following statements is TRUE?
, Solution 2024/2025
Pepper
A. The marginal tax rate for most U.S. corporations is 35% while the
average tax rate actually paid across U.S. corporations has actually been
closer to 25%
B. A Limited Liability Company (LLC) is legally defined as a person, while a
corporation with limited liability is considered a partnership of several
persons
C. The ability of a corporation to grow can be seriously limited by an
inability to raise cash via the primary capital markets for investment.
D. According to the theory of the firm, among all stakeholders, the
stockholders take the least risk. ANS✔✔ A
1.MC23. Which of the following is NOT an advantage to the corporate form
of organization?
A. Ability to raise large sums of equity capital
B. Ease of ownership transfer
C. Profits taxed at the corporate level
D. Limited liability for all owners ANS✔✔ C
1.43.F13. Which of the following is an advantage of the corporate form of
organization?
A. Corporations can easily raise capital and its ownership can be transferred
easily.
B. Corporations can be started easily and face little regulation.
C. Owners of corporations have unlimited liability and full control.
D. Corporations pay taxes on income before dividends to their owners.
ANS✔✔ A
1.Hwk5.F13. Which of the following statements is TRUE?
, Solution 2024/2025
Pepper
A. All secondary markets are dealer markets.
B. All secondary markets are broker markets.
C. All stock trades between existing shareholders are secondary market
transactions.
D. All stock transactions are secondary market transactions ANS✔✔ C
1.S13.Hwk4. Which of the following statements about the corporate form of
ownership is FALSE?
A. The shareholders are the owners of the firm and hold the top priority
claim among all stakeholders.
B. The shareholders elect the directors of the corporation, usually in
uncontested elections.
C. The directors appoint the firm's management, and yet managers usually
participate in nominating new candidates for directors.
D. Separation of ownership from control can cause agency problems where
managers act in their own interests, rather than shareholders' interests.
ANS✔✔ A
1.F12. Which of the following statements is TRUE?
A. Bank loans, private placements to funds and insurance companies, and
investment bank transactions are all activities in the secondary markets.
B. Like general partners, the owners of a corporation have unlimited liability
for business debts.
C. While maximizing stockholder wealth is the relevant goal of the
corporation, sometimes management goals are pursued at the expense of
the stockholders.
D. The Sarbanes-Oxley Act of 2002 dramatically streamlined American
corporate regulations resulting in billions of dollars in overall savings.
ANS✔✔ C
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