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The term used to describe the study of means by which a manager can determine which long-term investments to pursue, how to pay for those investments, and how to manage the daily finances of a firm is:

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The top financial officer in a firm is commonly referred to as the:

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chapter 1

introduction to corporate finance

Question	Answer
The term used to describe the study of means by which a manager can determine which long-term investments to pursue, how to pay for those investments, and how to manage the daily finances of a firm is:	business finance
The top financial officer in a firm is commonly referred to as the:	chief financial officer.
The person who is in charge of cash management and capital expenditures is called the:	treasurer.
The process of managing a firm’s long-term investments is called:	capital budgeting
The amount of debt and equity used by a firm to finance its operations is called the firm’s:	capital structure
Short-term assets and short-term liabilities are referred to as the firm’s:	working capital
The management of a firm’s cash, inventory, and payables is referred to as	working capital management.
A sole proprietorship is defined as a business:	that is owned by a single individual.
A business organization that is similar to a sole proprietorship but has two or more owners is called a:	a partnership agreement
A business entity which is treated as a legal “person” is called a:	corporation.
The legal papers which designate a firm’s name, nature of business, and intended life are called the:	articles of incorporation.
The rules which outline how a corporation will regulate itself are referred to as the:	bylaws.
A limited liability company can be defined as a:	cross between a partnership and a corporation.
Any situation where a potential conflict can arise between the firm’s owners and its managers is referred to as a(n):	agency problem.
Anyone other than the firm’s stockholders or creditors that might have a claim on the cash flows of a firm is called a:	stakeholder.
The primary market refers to:	the original sale of securities by the issuer.
The market for trading securities after the original sale is called the:	secondary market.
The sale of securities to the general public by the issuer is known as a:	public offering.
A negotiated sale of securities by an issuer to a specific buyer is called a(n):	private placement
Over-the-counter markets are __________ markets.	dealer
A securities market with a physical location that is designed to match buyers with sellers is called a(n) __________ market.	auction
When a company qualifies to have its securities traded on a particular exchange the stock of that company is said to be __________ with the exchange.	listed
Which one of the following questions falls into the financial topic of investments?	What are the risks involved with owning a particular security?
Which of the following are considered financial institutions? I. bank II. hospital III. insurance company IV. home builder	I and III only
Which of the following are careers in finance? I. insurance agent II. security analyst III. portfolio manager IV. corporate treasurer	I, II, III, and IV
Business finance addresses which one of the following questions?	Which long-term assets should a firm acquire?
Which one of the following functions should be assigned to the controller rather than the treasurer?	Which one of the following functions should be assigned to the controller rather than the treasurer?
Which one of the following statements is correct concerning the organizational chart of a corporation?	The tax manager generally reports to the controller rather than the treasurer.
The purpose of capital budgeting is to:	identify assets that produce value in excess of their cost.
Which one of the following statements is related to capital budgeting?	A firm should consider the size, risk, and timing of an asset’s cash flows before deciding to purchase that asset.
When a firm decides to borrow money rather than issue stock to raise funds for a new project, the company is making a(n) __________ decision.	capital structure
The capital structure of a firm refers to the firm’s:	long-term debt and equity
Working capital management includes which of the following? I. controlling the inventory level II. determining when to pay suppliers III. deciding how much long-term debt to assume IV. controlling the amount of cash that is readily available	I, II, and IV only
The daily financial operations of a firm are primarily controlled by managing the __________ of the firm.	working capital
A sole proprietor	assumes personal liability for all of the debts of the business.
The most widely used form of business entity in the U.S. is the:	sole proprietorship.
Under a general partnership,:	each partner receives only a proportionate share of the profits but is responsible for 100 percent of the partnership debts
In a general partnership, each general partner is personally liable for:	the total debts of the partnership, even if he or she was unaware that said debts were incurred.
The advantage of being a limited partner in a limited partnership is the ability to	invest in a partnership while limiting your loses to the amount you invested
Which one of the following statements about a limited partnership is correct?	A limited partner can sell his or her interest without the partnership dissolving.
A corporation:	may be considered a resident of an individual state.
The bylaws of a corporation include information such as the:	method by which directors are elected
The primary advantages of a limited liability company are the:	means of taxation and the limits on the liabilities assumed by the owners.
The general purpose of a limited liability company is to: I. be taxed like a partnership. II. be taxed like a corporation. III. provide unlimited liability for the owners. IV. provide limited liability for the owners.	I and IV only
The primary goal of financial management is to maximize the:	market value of the existing stock.
Which one of the following actions best matches the primary goal of financial management?	increasing the market value of the equity by improving the efficiency of operations
Which one of the following situations is most apt to create an agency problem?	a manager receives a bonus because he or she has hired the most new employees in the past year
An agency problem frequently exists in situations where there is a separation of:	company ownership and company management.
The control of a corporation ultimately lies with the:	company stockholders.
The Sarbanes-Oxley Act was enacted:	to help protect investors and others from financial malpractice.
The Sarbanes-Oxley Act:	makes the officers of a public corporation personally responsible for the firm’s financial statements.
Which one of the following transactions occurs in the primary market?	POQ sells new shares of POQ to Frederico
Which one of the following statements is correct concerning the secondary markets?	Secondary markets can be either dealer or auction markets.
Which of the following are characteristics of a dealer market? I. buyers purchase securities for themselves at their own risk II. the market matches buyers with sellers III. transactions are carried out on a physical trading floor IV. transactions	I and IV only
NASDAQ is: I. located in Chicago. II. an auction market. III. an over-the-counter market. IV. a private placement market.	III only
All large company stocks such as General Electric and Microsoft:	can trade on the exchange of their choosing as long as they qualify for listing.
Which one of the following statements is correct concerning the financial markets in the U.S.?	The NYSE lists significantly less companies than does NASDAQ.
The financial markets in the U.S.:	transact trades in both the primary and the secondary markets.

Created by: martin.2021

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