Honors Corporate Finance: Exam I -
Introduction UPDATED ACTUAL
QUESTIONS AND CORRECT ANSWERS
corporate finance - Correct answers✔✔the study of the financial decisions of a corporation
financing decision - Correct answers✔✔What are the sources of capital that will be used to pay
for the investments?
investment decision - Correct answers✔✔What investments should the firm make? the decision
to build, buy, or lease plants and equipment; to enter or exit an industry
stakeholders - Correct answers✔✔All the people who stand to gain or lose by the policies and
activities of a business and whose concerns the business needs to address.
sole proprietorship - Correct answers✔✔a business owned and managed by a single individual
unlimited personal liability - Correct answers✔✔complete responsibility for all business debts
partnership - Correct answers✔✔A business in which two or more persons combine their assets
and skills
Which forms of business have unlimited personal liability? - Correct answers✔✔Partnership and
Sole proprietorship
, limited partners - Correct answers✔✔partners in a limited partnership who invest capital but do
not participate in management and are not personally liable for partnership debts beyond their
capital contributions
limited liability companies (LLC) - Correct answers✔✔-No general partner
-All the owners have limited liability, but they can also run the business
Corporations - Correct answers✔✔a company or group of people authorized to act as a single
entity (legally a person) and recognized as such in law.
solely responsible for its obligations
owners have limited liability
share of firms and revenue - Correct answers✔✔5 percent of filings are corporations
80 percent of revenues
double taxation - Correct answers✔✔feature of taxation that allows stockholders' dividends to be
taxed both as corporate profit and as personal income
shareholders - Correct answers✔✔Investors who purchase shares of stock in a corporation.
board of directors - Correct answers✔✔a group of persons elected by the stockholders to manage
a corporation
treasurer - Correct answers✔✔oversees cash, raising capital and maintaining relationship with
banks, debtholders, and shareholders
Introduction UPDATED ACTUAL
QUESTIONS AND CORRECT ANSWERS
corporate finance - Correct answers✔✔the study of the financial decisions of a corporation
financing decision - Correct answers✔✔What are the sources of capital that will be used to pay
for the investments?
investment decision - Correct answers✔✔What investments should the firm make? the decision
to build, buy, or lease plants and equipment; to enter or exit an industry
stakeholders - Correct answers✔✔All the people who stand to gain or lose by the policies and
activities of a business and whose concerns the business needs to address.
sole proprietorship - Correct answers✔✔a business owned and managed by a single individual
unlimited personal liability - Correct answers✔✔complete responsibility for all business debts
partnership - Correct answers✔✔A business in which two or more persons combine their assets
and skills
Which forms of business have unlimited personal liability? - Correct answers✔✔Partnership and
Sole proprietorship
, limited partners - Correct answers✔✔partners in a limited partnership who invest capital but do
not participate in management and are not personally liable for partnership debts beyond their
capital contributions
limited liability companies (LLC) - Correct answers✔✔-No general partner
-All the owners have limited liability, but they can also run the business
Corporations - Correct answers✔✔a company or group of people authorized to act as a single
entity (legally a person) and recognized as such in law.
solely responsible for its obligations
owners have limited liability
share of firms and revenue - Correct answers✔✔5 percent of filings are corporations
80 percent of revenues
double taxation - Correct answers✔✔feature of taxation that allows stockholders' dividends to be
taxed both as corporate profit and as personal income
shareholders - Correct answers✔✔Investors who purchase shares of stock in a corporation.
board of directors - Correct answers✔✔a group of persons elected by the stockholders to manage
a corporation
treasurer - Correct answers✔✔oversees cash, raising capital and maintaining relationship with
banks, debtholders, and shareholders
