lOMoAR
lOMoARcPSD|
cPSD|30878495
30878495
Business and Economic Forecasting
Business and Economic Forecasting (Liberty University)
(Answers Given at the end of document) A+
, lOMoAR cPSD| 30878495
Exam
Name_ ___ ____ _____________ ______
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
1) The liability of sole proprietors is limited to the amount of their investment in the 1)
company.
2) General partners have limited personal liability for business debts in a limited 2)
partnership.
3) The separation of ownership and management is one distinctive feature of corporations. 3)
4) A major disadvantage of partnerships is that they have double taxation of profits. 4)
5) Financial assets have value because they are claims on the firm's real assets and the cash 5)
that those assets will produce.
6) Capital budgeting decisions are used to determine how to raise the cash necessary for 6)
investments.
7) A successful investment is one that increases the value of the firm. 7)
8) Facebook's decision to spend $700 million to acquire Instagram is an investment 8)
decision.
9) Boards of directors are generally appointed by the firm's senior officers. 9)
10) Financial analysts are involved in monitoring the risk associated with investment projects 10)
and financing decisions.
11) The primary goal of any company should be to maximize current period profits. 11)
12) Maximizing profits is the same as maximizing the value of the firm. 12)
13) The Dodd-Frank financial reform law in 2010 granted shareholders a binding vote on 13)
executive compensation.
14) Sole proprietorships face the same agency problems as those associated with 14)
corporations.
15) Real assets can be intangible assets. 15)
1
, lOMoAR cPSD| 30878495
16) Making good investment and financing decisions is the chief task of the financial 16)
manager.
17) If a project's value is less than its required investment, then the project is financially 17)
attractive.
18) GlaxoSmithKline's spending of $3.6 billion on research and development of new drugs is 18)
a capital budgeting decision but not a financing decision.
19) Deltas's issuance of a $1.0 billion bond is a financing decision. 19)
20) An IOU ("I owe you") from your brother-in-law is a financial asset. 20)
21) The separation of ownership and management is one distinctive feature of both 21)
corporations and sole proprietors.
22) Shareholders welcome higher short-term profits even when they damage long-term 22)
profits.
23) A well-designed compensation package can help a firm achieve its goal of maximizing 23)
market value.
24) While control of large public companies in the United States is exercised through the 24)
board of directors and pressure from the stock market, in many other countries the stock
market is less important and control shifts to major stockholders, typically banks and
other companies.
25) Investors are responsible for deciding whether to reinvest in the firm's operations or take 25)
the profits as a distribution.
26) Established firms can create value by developing long-term relationships and maintaining 26)
a good reputation.
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the
question.
27) Which one of these is a disadvantage of the corporate form of business? 27)
A) Limited firm life
B) Legal requirements
C) Access to capital
D) Unlimited personal liability for owners
2
lOMoARcPSD|
cPSD|30878495
30878495
Business and Economic Forecasting
Business and Economic Forecasting (Liberty University)
(Answers Given at the end of document) A+
, lOMoAR cPSD| 30878495
Exam
Name_ ___ ____ _____________ ______
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
1) The liability of sole proprietors is limited to the amount of their investment in the 1)
company.
2) General partners have limited personal liability for business debts in a limited 2)
partnership.
3) The separation of ownership and management is one distinctive feature of corporations. 3)
4) A major disadvantage of partnerships is that they have double taxation of profits. 4)
5) Financial assets have value because they are claims on the firm's real assets and the cash 5)
that those assets will produce.
6) Capital budgeting decisions are used to determine how to raise the cash necessary for 6)
investments.
7) A successful investment is one that increases the value of the firm. 7)
8) Facebook's decision to spend $700 million to acquire Instagram is an investment 8)
decision.
9) Boards of directors are generally appointed by the firm's senior officers. 9)
10) Financial analysts are involved in monitoring the risk associated with investment projects 10)
and financing decisions.
11) The primary goal of any company should be to maximize current period profits. 11)
12) Maximizing profits is the same as maximizing the value of the firm. 12)
13) The Dodd-Frank financial reform law in 2010 granted shareholders a binding vote on 13)
executive compensation.
14) Sole proprietorships face the same agency problems as those associated with 14)
corporations.
15) Real assets can be intangible assets. 15)
1
, lOMoAR cPSD| 30878495
16) Making good investment and financing decisions is the chief task of the financial 16)
manager.
17) If a project's value is less than its required investment, then the project is financially 17)
attractive.
18) GlaxoSmithKline's spending of $3.6 billion on research and development of new drugs is 18)
a capital budgeting decision but not a financing decision.
19) Deltas's issuance of a $1.0 billion bond is a financing decision. 19)
20) An IOU ("I owe you") from your brother-in-law is a financial asset. 20)
21) The separation of ownership and management is one distinctive feature of both 21)
corporations and sole proprietors.
22) Shareholders welcome higher short-term profits even when they damage long-term 22)
profits.
23) A well-designed compensation package can help a firm achieve its goal of maximizing 23)
market value.
24) While control of large public companies in the United States is exercised through the 24)
board of directors and pressure from the stock market, in many other countries the stock
market is less important and control shifts to major stockholders, typically banks and
other companies.
25) Investors are responsible for deciding whether to reinvest in the firm's operations or take 25)
the profits as a distribution.
26) Established firms can create value by developing long-term relationships and maintaining 26)
a good reputation.
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the
question.
27) Which one of these is a disadvantage of the corporate form of business? 27)
A) Limited firm life
B) Legal requirements
C) Access to capital
D) Unlimited personal liability for owners
2
