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Exam 1 FIN370 Winter 2009 Version - A Key 1. The process of managing a firm's long-term investments is called: a. capital structure management. b. asset allocation. c. risk management. D . capital budgeting. e. working capital management. BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEARNING OBJECTIVE NUMBER: 1 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 001 #1 SECTION: 1.2 TOPIC: CAPITAL BUDGETING TYPE: DEFINITIONS 2. Capital structure refers to the: a. combination of short-term and long-term assets held by a firm. B . mixture of debt and equity a firm uses to finance its operations. c. types of long-term assets a firm employs in its operations. d. amount of cash versus other short-term assets held by a firm. e. average amount of cash equivalents held by a firm. BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEARNING OBJECTIVE NUMBER: 1 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 001 #2 SECTION: 1.2 TOPIC: CAPITAL STRUCTURE TYPE: DEFINITIONS 3. A business organization owned by two or more individuals or entities, each of whom has unlimited liability for the firm's debts, is called a: a. limited liability company. b. limited partnership. c. dual company. d. joint stock company. E . general partnership. BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEARNING OBJECTIVE NUMBER: 3 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 001 #5 SECTION: 1.3 TOPIC: GENERAL PARTNERSHIP TYPE: DEFINITIONS 4. The potential conflict of interest between a firm's owners and its managers is referred to as a(n): a. organizational problem. b. structure problem. C . agency problem. d. control issue. e. management conflict. BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEARNING OBJECTIVE NUMBER: 4 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 001 #7 SECTION: 1.5 TOPIC: AGENCY PROBLEM TYPE: DEFINITIONS 5. Working capital management includes which of the following? I. establishing the inventory level II. deciding when to pay suppliers III. determining the amount of cash needed on a daily basis IV. establishing credit terms for customers a. I and II only b. III and IV only c. I, II, and III only d. I, II, and IV only E . I, II, III, and IV BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEARNING OBJECTIVE NUMBER: 1 LEVEL OF DIFFICULTY: INTERMEDIATE Ross - Chapter 001 #20 SECTION: 1.2 TOPIC: WORKING CAPITAL MANAGEMENT TYPE: CONCEPTS 6. A sole proprietorship: A . is relatively easy to create. b. involves significant legal costs during the formation process. c. has an unlimited life. d. is taxed as a separate legal entity. e. can generally raise significant capital from non-owner sources. BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEARNING OBJECTIVE NUMBER: 3 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 001 #22 SECTION: 1.3 TOPIC: SOLE PROPRIETORSHIP TYPE: CONCEPTS 7. Which of the following are advantages of the corporate form of organization? ... View Full Document

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