Fin 315 Test 1 Answers

FIN 315 - Exam 1 Answers

1. Under which of the following legal forms of organization, is ownership readily transferable?

a) Sole Proprietorships

b) Partnerships

c) Limited Partnership

d) Corporation

2. All of the following are key strengths of a corporation EXCEPT

a) access to capital markets

b) limited liability

c) low organization costs

d) readily transferable ownership

3) The primary goal of the financial manager is

a) minimizing risk

b) maximizing profit

c) maximizing wealth

d) minimizing return

4) Corporate owner’s receive realizable return through

a) earnings per share and cash dividends

b) increase in share price and cash dividends

c) increase in share price and earnings per share

d) profit and earnings per share

5) Cash flow and risk are the key determinants in share price. Increased cash flow results in _______, other things remaining the same.

a) a lower share price

b) a higher share price

c) an unchanged share price

d) an undetermined share price

6) Economic theories that the financial manager must be able to utilize for efficient business operations, include

a) supply-and-demand analysis

b) marginal analysis

c) profit-maximizing strategies

d) price theory

e) all of the above

7) The amount earned during the accounting period on each outstanding share of common stock is called

a) common stock dividend

b) earnings per share

c) net profits after taxes

d) net income

8) Managing the firm's assets includes all of the following EXCEPT

a) inventory

b) fixed assets

c) AR

d) NP

9) The conflict between the goals of a firm's owners and the goals of its non-owner managers is

a) the agency problem

b) incompatibility

c) serious only when profits decline

d) a little importance in most large US firms

10) The key participants in financial transactions are individuals, businesses, and governments....