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sampletest1 - SAMPLE TEST FOR BUAD 306 MIDTERM 1 Please...

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SAMPLE TEST FOR BUAD 306 MIDTERM 1 Please note that the actual test will have 30 to 40 questions. Also, the actual test will have more or less equal weight on all chapters and more or less equal weight on concepts versus problems. In addition to the sample test, you should study: the book, the slides, the notes you took in class, and the practice problems. 1. Which one of the following is a primary market transaction? a. a dealer selling shares of stock to an individual investor b. a dealer buying newly issued shares of stock from a corporation c. an individual investor selling shares of stock to another individual d. a bank selling shares of a medical firm to an individual e. a sole proprietor buying shares of stock from an individual investor 2. Which of the following are agency costs? I. forgoing an investment opportunity which would add to the market value of the owner’s equity II. paying a dividend to each of the existing shareholders III. purchasing new equipment which increases the value of each share of stock IV. hiring outside auditors to verify the accuracy of the company financial statements 3. The decisions made by financial managers should all be ones which increase the: 4. Which type of business organization has all the respective rights and privileges of a legal person? 5. Which of the following are advantages of the corporate form of business ownership? I. limited liability for firm debt II. double taxation III. ability to raise capital IV. unlimited firm life a. I and II only b. III and IV only c. I, II, and III only d. II, III, and IV only
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e. I, III, and IV only 6. Which of the following are disadvantages of a partnership? I. limited life of the firm II. personal liability for firm debt III. greater ability to raise capital than a sole proprietorship IV. lack of ability to transfer partnership interest 7. A general partner:
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