CORPORATE FINANCE QUESTIONS AND
ANSWERS PROVIDED FOR REVISION. 2024
1. share of are units of ownership interest, or equity, in a
corporation
: common stock
2. which of the following features of a corporation is LEAST
accurate? earnings from a corporation are taxed only once
3. a limited liability company is essentially: a limited partnership
without a general partner
4. how do the shareholders of most corporations exercise their
control of that corporation? by electing members of a board
of directors
5. in most corporations, to whom does the chief financial officer
report? the board of directors
6. which of the following is a major duty of the financial
manager: -to make investment decisions
-to make financing decisions
-to manage cash flow from operating activities
7. cash is a: current asset
8. accounts payable is a: current liability
1 1. a 30-yr old mortgage loan is a: long-term liability
12. T or F: agency costs are fees paid by the management of a
corporation to compensate any investor that feels it has
suffered a loss due to agency problems: F
13. T or F: partnerships are the most common type of business
in the world: F 14. t or F: the balance sheet shows the assets,
liabilities, and stockholders’ equity of a firm over a given length
of time: F
15. the corporate controller is generally responsible for which one
of these functions? tax reporting
, CORPORATE FINANCE QUESTIONS AND
ANSWERS PROVIDED FOR REVISION. 2024
16. a firms capital structure refers to the firms: proportions of financing
from current and long-term debt and equity
17. for a firm to create value it must: create more cash flow than
it uses
18. the ultimate control of a corporation lies in the hands of the
corporate: stock holders
19. a proxy fight occurs when: a group solicits voting rights to replace the
board of directions
20. the basic regulatory framework for the public trading of securities
in the US was provided by the: securities act of 1933 and the
securities exchange act of 1934
21. US corporate taxes switch to a constant flat rate once the
average tax reaches: 35 percent
22. operating cash flow is defined as: EBIT+ Depreciation - Taxes
23. earnings per share will increase when: depreciation
decreases
24. assuming the numbers of shares outstanding remains
constant, an increase in dividends per share will reduce the:
addition to retained earnings 25. book value: is based on
historical cost
26. if you sell an asset, you are most apt to receive which value
for that asset: market value
27. all else held constant, the earnings per share will: decrease
as the number of shares outstanding increase
28. according to the generally accepted accounting principles,
costs are: matched with revenues
29. when you are making a financial decision, the most relevant
tax rate is the rate: marginal
ANSWERS PROVIDED FOR REVISION. 2024
1. share of are units of ownership interest, or equity, in a
corporation
: common stock
2. which of the following features of a corporation is LEAST
accurate? earnings from a corporation are taxed only once
3. a limited liability company is essentially: a limited partnership
without a general partner
4. how do the shareholders of most corporations exercise their
control of that corporation? by electing members of a board
of directors
5. in most corporations, to whom does the chief financial officer
report? the board of directors
6. which of the following is a major duty of the financial
manager: -to make investment decisions
-to make financing decisions
-to manage cash flow from operating activities
7. cash is a: current asset
8. accounts payable is a: current liability
1 1. a 30-yr old mortgage loan is a: long-term liability
12. T or F: agency costs are fees paid by the management of a
corporation to compensate any investor that feels it has
suffered a loss due to agency problems: F
13. T or F: partnerships are the most common type of business
in the world: F 14. t or F: the balance sheet shows the assets,
liabilities, and stockholders’ equity of a firm over a given length
of time: F
15. the corporate controller is generally responsible for which one
of these functions? tax reporting
, CORPORATE FINANCE QUESTIONS AND
ANSWERS PROVIDED FOR REVISION. 2024
16. a firms capital structure refers to the firms: proportions of financing
from current and long-term debt and equity
17. for a firm to create value it must: create more cash flow than
it uses
18. the ultimate control of a corporation lies in the hands of the
corporate: stock holders
19. a proxy fight occurs when: a group solicits voting rights to replace the
board of directions
20. the basic regulatory framework for the public trading of securities
in the US was provided by the: securities act of 1933 and the
securities exchange act of 1934
21. US corporate taxes switch to a constant flat rate once the
average tax reaches: 35 percent
22. operating cash flow is defined as: EBIT+ Depreciation - Taxes
23. earnings per share will increase when: depreciation
decreases
24. assuming the numbers of shares outstanding remains
constant, an increase in dividends per share will reduce the:
addition to retained earnings 25. book value: is based on
historical cost
26. if you sell an asset, you are most apt to receive which value
for that asset: market value
27. all else held constant, the earnings per share will: decrease
as the number of shares outstanding increase
28. according to the generally accepted accounting principles,
costs are: matched with revenues
29. when you are making a financial decision, the most relevant
tax rate is the rate: marginal
