Finance Paper

2396 Words10 Pages
1) The true owners of the corporation are the: A. board of directors of the firm. B. common stockholders. C. holders of debt issues of the firm. D. preferred stockholders. 2) Which of the following best describes the goal of the firm? A. The maximization of the total market value of the firm's common stock] B. Profit maximization C. Risk minimization D. None of the above 3) Which of the following categories of owners have limited liability? A. General partners B. Sole proprietors C. Shareholders of a corporation D. Both a and b 4) __________ is a method of offering securities to a limited number of investors. A. Public offering B. Syndicated underwriting C. Initial public offering D. Private placement 5) Which of the following would increase the need for external equity? A. A reduction in corporate profits B. A seasonal reduction in sales revenues C. Inadequate investment opportunities D. A slow-down in economic growth 6) Which of the following does NOT involve underwriting by an investment banker? A. Syndicated purchases B. Commission basis purchases C. Competitive bid purchases D. Negotiated purchases 7) According to the agency problem, _________ represent the principals of a corporation. A. employees B. suppliers C. shareholders D. managers 8) Which of the following is NOT a principle of basic financial management? A. Risk/return tradeoff B. Incremental cash flow counts C. Efficient capital markets D. Profit is king 9) Difficulty in finding profitable projects is due to: A. social responsibility. B. competitive markets. C. ethical dilemmas. D. opportunity costs. 10) Marshall Networks, Inc. has a total asset turnover of 2.5% and a net profit margin of 3.5%. The firm has a return on equity of 17.5%. Calculate Marshall's debt ratio. A. 30% B. 40% C. 50% D. 60%

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