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Chapter 01 Introduction to Corporate Finance




Question;37.;Which one of the;following business types is best suited to raising large amounts of;capital?;A.;sole proprietorship;B.;limited liability company;C.;corporation;D.;general partnership;E.;limited partnership;38.;Which type of;business organization has all the respective rights and privileges of a legal;person?;A.;sole proprietorship;B.;general partnership;C.;limited partnership;D.;corporation;E.;limited liability company;39.;Financial;managers should strive to maximize the current value per share of the;existing stock because;A.;doing so guarantees the company will grow in size at the;maximum possible rate.;B.;doing so increases the salaries of all the employees.;C.;the current stockholders are the owners of the corporation.;D.;doing so means the firm is growing in size faster than its;competitors.;E.;the managers often receive shares of stock as part of their;compensation.;40.;The decisions;made by financial managers should all be ones which increase the;A.;size of the firm.;B.;growth rate of the firm.;C.;marketability of the managers.;D.;market value of the existing owners' equity.;E.;financial distress of the firm.;41.;Which one of;the following actions by a financial manager creates an agency problem?;A.;Refusing to borrow money when doing so will create losses for;the firm;B.;Refusing to lower selling prices if doing so will reduce the;net profits;C.;Agreeing to expand the company at the expense of stockholders;value;D.;Agreeing to pay bonuses based on the book value of the company;stock;E.;Increasing current costs in order to increase the market value;of the stockholders' equity;42.;Which of the;following help convince managers to work in the best interest of the;stockholders?;I. compensation;based on the value of the stock;II. stock option;plans;III. threat of a;proxy fight;IV. threat of;conversion to a partnership;A.;I and II only;B.;II and III only;C.;I, II and III only;D.;I and III only;E.;I, II, III, and IV


Paper#55220 | Written in 18-Jul-2015

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