Question 1

Beginning in 2011,the Dodd-Frank Wall Street Reform and Consumer Protection Act requires corporations with a market value over ________ to allow a nonbinding shareholder vote on executive pay.

Accepted Answer

A)  $25,000,000
B)  $50,000,000
C)  $75,000,000
D)  $100,000
E)  $750,000F) B) and C)
G) D) and E)

Question 2

Which one of the following best describes the primary intent of the Sarbanes-Oxley Act of 2002?

Accepted Answer

A)  Increase the costs of going public
B)  Increase protection against corporate fraud
C)  Limit secondary issues of corporate securities
D)  Decrease the number of publicly traded firms
E)  Increase the number of firms that "go dark"F) A) and C)
G) B) and E)

Question 3

Tim has been promoted and is now in charge of all fixed asset purchases.In other words,Tim is in charge of:

Accepted Answer

A)  capital structure management.
B)  asset allocation.
C)  risk management.
D)  capital budgeting.
E)  working capital management.F) A) and C)
G) B) and D)

Question 4

Which one of the following statements is correct?

Accepted Answer

A)  All of the major stock exchanges are U.S. based.
B)  The NYSE was created by the National Association of Securities Dealers in the early 1970s.
C)  The American Stock Exchange is a dealer market.
D)  OTC markets have a physical trading floor generally located in either New York City or Chicago.
E)  The primary purpose of the NYSE is to match buyers with sellers.F) All of the above
G) A) and E)

Question 5

Which one of the following situations is most apt to create an agency conflict?

Accepted Answer

A)  Compensating a manager based on his or her division's net income
B)  Giving all employees a bonus if a certain level of efficiency is maintained
C)  Hiring an independent consultant to study the operating efficiency of the firm
D)  Rejecting a profitable project to protect employee jobs
E)  Selling an underproducing segment of the firmF) None of the above
G) A) and D)

Question 6

List three decisions that a financial manager makes that would fall under the category of working capital management.

Accepted Answer

Working capital management is the manage...

Question 7

Which one of the following parties can sell shares of ABC stock in the primary market?

Accepted Answer

A)  ABC company
B)  Any corporation, other than the ABC company
C)  Institutional shareholder
D)  Private individual shareholder
E)  Any of theseF) A) and B)
G) A) and C)

Question 8

Which one of the following correctly defines a common chain of command within a corporation?

Accepted Answer

A)  The controller reports directly to the corporate treasurer.
B)  The treasurer reports directly to the board of directors.
C)  The chief financial officer reports directly to the board of directors.
D)  The credit manager reports directly to the controller.
E)  The controller reports directly to the chief financial officer.F) All of the above
G) B) and D)

Question 9

Which one of the following statements related to securities dealers is correct?

Accepted Answer

A)  Dealers match buyers with sellers.
B)  Dealers buy and sell from their own inventory.
C)  Dealers operate on a physical trading floor.
D)  Dealers operate exclusively in auction markets.
E)  Dealers are limited to trading nonlisted stocks.F) None of the above
G) D) and E) B

Question 10

Which one of the following statements is correct?

Accepted Answer

A)  NASDAQ has more listed stocks than does the NYSE.
B)  The NYSE is a dealer market.
C)  NASDAQ is an auction market.
D)  NASDAQ has the most stringent listing requirements of any U.S. exchange.
E)  The trading floor for NASDAQ is located in Chicago.F) B) and C)
G) C) and D) A

Question 11

Which one of the following is a capital structure decision?

Accepted Answer

A)  Determining the optimal inventory level
B)  Establishing the preferred debt-equity level
C)  Selecting new equipment to purchase
D)  Setting the terms of sale for credit sales
E)  Determining when suppliers should be paidF) C) and D)
G) All of the above

Question 12

Which one of the following transactions occurred in the primary market?

Accepted Answer

A)  Maria gave 100 shares of Alto stock to her best friend.
B)  Gene purchased 300 shares of Alto stock from Ted.
C)  South Wind Products sold 1,000 shares of newly issued stock to Mike.
D)  Terry sold 3,000 shares of Uno stock to his brother.
E)  The president of Trecco, Inc. sold 500 shares of Trecco stock to his son.F) All of the above
G) B) and C) C

Question 13

Which one of the following statements correctly applies to a sole proprietorship?

Accepted Answer

A)  The business entity has an unlimited life.
B)  The ownership can easily be transferred to another individual.
C)  The owner enjoys limited liability for the firm's debts.
D)  Debt financing is easy to arrange in the firm's name.
E)  Obtaining additional equity is dependent on the owner's personal finances.F) B) and E)
G) B) and D)

Question 14

Margie opened a used bookstore and is both the 100 percent owner and the store's manager.Which type of business entity does Margie own if she is personally liable for all the store's debts?

Accepted Answer

A)  Sole proprietorship
B)  Limited partnership
C)  Corporation
D)  Joint stock company
E)  General partnershipF) A) and C)
G) A) and D)

Question 15

Which one of the following is contained in the corporate bylaws?

Accepted Answer

A)  Procedures for electing corporate directors
B)  State of incorporation
C)  Number of authorized shares
D)  Intended life of the corporation
E)  Business purpose of the corporationF) A) and D)
G) B) and C)

Question 16

Give an example of a situation where the management of a firm is acting in a manner that is contrary to the principal goal of financial management.

Accepted Answer

The primary goal of financial ...

Question 17

Capital budgeting includes the evaluation of which of the following?

Accepted Answer

A)  Size of future cash flows only
B)  Size and timing of future cash flows only
C)  Timing and risk of future cash flows only
D)  Risk and size of future cash flows only
E)  Size, timing, and risk of future cash flowsF) A) and C)
G) A) and B)

Question 18

Explain what capital structure management is and give three examples of capital structure decisions.

Accepted Answer

Capital structure management relates to ...

Question 19

Todd wants to start his own business and is debating between organizing the business as a sole proprietorship or a corporation.Explain the pros and cons of both forms of business organization.

Accepted Answer

Sole proprietorship:
Pros: Easy to form,...

Question 20

Ted currently owns 100 shares of a publicly traded stock that he would like to sell.Which one of the following provides the most efficient means for Ted to sell his shares?

Accepted Answer

A)  Issuer-sponsored Dutch auction
B)  Proxy statement
C)  Private placement transaction
D)  Stakeholder purchase
E)  Secondary market transactionF) A) and C)
G) A) and B)

Exam 1: Introduction to Financial Management

Beginning in 2011,the Dodd-Frank Wall Street Reform and Consumer Protection Act requires corporations with a market value over ________ to allow a nonbinding shareholder vote on executive pay.

Correct AnswerverifiedShow Answer

Which one of the following best describes the primary intent of the Sarbanes-Oxley Act of 2002?

Correct AnswerverifiedShow Answer

Tim has been promoted and is now in charge of all fixed asset purchases.In other words,Tim is in charge of:

Correct AnswerverifiedShow Answer

Which one of the following statements is correct?

Correct AnswerverifiedShow Answer

Which one of the following situations is most apt to create an agency conflict?

Correct AnswerverifiedShow Answer

List three decisions that a financial manager makes that would fall under the category of working capital management.

Correct AnswerverifiedWorking capital management is the manage...View AnswerShow Answer

Which one of the following parties can sell shares of ABC stock in the primary market?

Correct AnswerverifiedShow Answer

Which one of the following correctly defines a common chain of command within a corporation?

Correct AnswerverifiedShow Answer

Which one of the following statements related to securities dealers is correct?

Correct AnswerverifiedB

Which one of the following statements is correct?

Correct AnswerverifiedA

Which one of the following is a capital structure decision?

Correct AnswerverifiedShow Answer

Which one of the following transactions occurred in the primary market?

Correct AnswerverifiedC

Which one of the following statements correctly applies to a sole proprietorship?

Correct AnswerverifiedShow Answer

Margie opened a used bookstore and is both the 100 percent owner and the store's manager.Which type of business entity does Margie own if she is personally liable for all the store's debts?

Correct AnswerverifiedShow Answer

Which one of the following is contained in the corporate bylaws?

Correct AnswerverifiedShow Answer

Give an example of a situation where the management of a firm is acting in a manner that is contrary to the principal goal of financial management.

Correct AnswerverifiedThe primary goal of financial ...View AnswerShow Answer

Capital budgeting includes the evaluation of which of the following?

Correct AnswerverifiedShow Answer

Explain what capital structure management is and give three examples of capital structure decisions.

Correct AnswerverifiedCapital structure management relates to ...View AnswerShow Answer

Todd wants to start his own business and is debating between organizing the business as a sole proprietorship or a corporation.Explain the pros and cons of both forms of business organization.

Correct AnswerverifiedSole proprietorship:Pros: Easy to form,...View AnswerShow Answer

Ted currently owns 100 shares of a publicly traded stock that he would like to sell.Which one of the following provides the most efficient means for Ted to sell his shares?

Correct AnswerverifiedShow Answer

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Working capital management is the manage...
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B

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A

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C

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The primary goal of financial ...
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Capital structure management relates to ...
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Sole proprietorship:
Pros: Easy to form,...
View Answer

Correct Answer
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