FIN 300 Exam 1 : Chapter 1, 5, & 6 |Questions with multiple
choices
1. Limited partners benefit from which of the primary advantages?
Their responsibility for the firm's debts is prorated based on their percentage of ownership
They have the opportunity to earn tax-free income They do not face any
potential financial losses
Their maximum loss cannot exceed the amount of their capital investment
They have control over the administrative affairs of the partnership: Their maximum loss cannot exceed the amount
of their capital investment
2. Which one of the following questions involves a capital structure decision?
How much debt should the firm incur to fund a project?
How much funding should be allocated to financing customer purchases of a new product?
How much inventory will be needed to support a project?
How should the firm allocate its limited available funds among acceptable projects?
Which one of two project proposals should the firm implement?: How much debt should the firm incur to fund a
project?
3. A sole proprietorship:
is designed to protect the personal assets of the owner may earn profits that are subject
to double taxation
requires the owner to be personally responsible for all of the company's debts is the least represented type of firm
in the U.S. today
provides the same benefits to owners that a limited liability company does: -
requires the owner to be personally responsible for all of the company's debts
, FIN 300 Exam 1 : Chapter 1, 5, & 6 |Questions with multiple
choices
4. Which form of business would be the best choice if it were necessary to raise large amounts of capital?
Limited partnership Limited liability
company Sole proprietorship
Corporation
General partnership: Corporation
5. Which one of the following questions is least likely to be addressed by financial managers?
Should customers be given 30 or 45 days to pay for their credit purchases? How much cash should the firm keep
on hand?
In which region of the country should a new product be launched? Should the firm acquire new equipment?
Should the firm pay off its debt early?: In which region of the country should a new product be launched?
6. Financial managers should primarily focus on the interests of:
shareholders themselves
the board of directors
their immediate supervisor
the vice president of finance: shareholders
7. The Sarbanes-Oxley Act of 2002 holds a public company's respon-
sible for the accuracy of the company's financial statements.
, FIN 300 Exam 1 : Chapter 1, 5, & 6 |Questions with multiple
choices
Securities and Exchange Commission
agent
external legal counsel managers
internal legal counsel
internal auditors: managers
8. A firm owned by two or more people who each have unlimited liability for all of the firm's debts is called a:
limited partnership limited liability
company general partnership
corporation
sole proprietorship: general partnership
9. In a typical corporate organizational structure:
the vice president of finance reports to the chair of the board the chief executive officer
reports to the president
the chief operations officer reports to the vice president of production the treasurer reports to the president
the controller reports to the chief financial officer: the controller reports to the chief financial officer
10.A firm's mixture of debt and equity financing is the result of its
decisions.
cash management
, FIN 300 Exam 1 : Chapter 1, 5, & 6 |Questions with multiple
choices
working capital management capital budgeting
cost analysis
capital structure: capital structure
11.Thomas invests $122 in an account that pays 5 percent simple interest. How much money will Thomas
have at the end of 5 years?
$158.60
$148.29
$155.71
$146.40
$152.50: $152.50
12.Beatrice invests $1,390 in an account that pays 4 percent simple interest. How much more could she have
earned over a 5-year period if the interest had been compounded annually?
$26.96
$19.48
$33.70
$23.15
$115.74: $23.15
13.What is the present value of $12,700 to be received 4 years from today if the discount rate is 7 percent?
$10,888.20
$10,366.98
choices
1. Limited partners benefit from which of the primary advantages?
Their responsibility for the firm's debts is prorated based on their percentage of ownership
They have the opportunity to earn tax-free income They do not face any
potential financial losses
Their maximum loss cannot exceed the amount of their capital investment
They have control over the administrative affairs of the partnership: Their maximum loss cannot exceed the amount
of their capital investment
2. Which one of the following questions involves a capital structure decision?
How much debt should the firm incur to fund a project?
How much funding should be allocated to financing customer purchases of a new product?
How much inventory will be needed to support a project?
How should the firm allocate its limited available funds among acceptable projects?
Which one of two project proposals should the firm implement?: How much debt should the firm incur to fund a
project?
3. A sole proprietorship:
is designed to protect the personal assets of the owner may earn profits that are subject
to double taxation
requires the owner to be personally responsible for all of the company's debts is the least represented type of firm
in the U.S. today
provides the same benefits to owners that a limited liability company does: -
requires the owner to be personally responsible for all of the company's debts
, FIN 300 Exam 1 : Chapter 1, 5, & 6 |Questions with multiple
choices
4. Which form of business would be the best choice if it were necessary to raise large amounts of capital?
Limited partnership Limited liability
company Sole proprietorship
Corporation
General partnership: Corporation
5. Which one of the following questions is least likely to be addressed by financial managers?
Should customers be given 30 or 45 days to pay for their credit purchases? How much cash should the firm keep
on hand?
In which region of the country should a new product be launched? Should the firm acquire new equipment?
Should the firm pay off its debt early?: In which region of the country should a new product be launched?
6. Financial managers should primarily focus on the interests of:
shareholders themselves
the board of directors
their immediate supervisor
the vice president of finance: shareholders
7. The Sarbanes-Oxley Act of 2002 holds a public company's respon-
sible for the accuracy of the company's financial statements.
, FIN 300 Exam 1 : Chapter 1, 5, & 6 |Questions with multiple
choices
Securities and Exchange Commission
agent
external legal counsel managers
internal legal counsel
internal auditors: managers
8. A firm owned by two or more people who each have unlimited liability for all of the firm's debts is called a:
limited partnership limited liability
company general partnership
corporation
sole proprietorship: general partnership
9. In a typical corporate organizational structure:
the vice president of finance reports to the chair of the board the chief executive officer
reports to the president
the chief operations officer reports to the vice president of production the treasurer reports to the president
the controller reports to the chief financial officer: the controller reports to the chief financial officer
10.A firm's mixture of debt and equity financing is the result of its
decisions.
cash management
, FIN 300 Exam 1 : Chapter 1, 5, & 6 |Questions with multiple
choices
working capital management capital budgeting
cost analysis
capital structure: capital structure
11.Thomas invests $122 in an account that pays 5 percent simple interest. How much money will Thomas
have at the end of 5 years?
$158.60
$148.29
$155.71
$146.40
$152.50: $152.50
12.Beatrice invests $1,390 in an account that pays 4 percent simple interest. How much more could she have
earned over a 5-year period if the interest had been compounded annually?
$26.96
$19.48
$33.70
$23.15
$115.74: $23.15
13.What is the present value of $12,700 to be received 4 years from today if the discount rate is 7 percent?
$10,888.20
$10,366.98
