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Finance Midterm

Finance Midterm - University of Southern California...

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University of Southern California Marshall School of Business BUAD 306 - Business Finance Selvili MIDTERM 1 February 21, 2008 Name Guidelines This test consists of 9 pages including this page. Please make sure you have all the pages. The exam is closed book. You are allowed two double-sided cheat sheets and your financial calculators. Your allotted time is 110 minutes. Please make sure to follow all the instructions to fill out the scantron properly. Failure to do so may result in losing points. If you are unsure about something, ask. Choose the answer that fits best and mark it on your scantron. Your scantron will be the only document graded. Anything you write on test document where the questions are located will NOT be graded. When you are finished, please TUCK EVERYTHING (scantron, cheat sheets, scratch paper) INTO YOUR EXAM. 1
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1. Which of the following are agency costs? I. investing in a project 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 decreases the value of each share of stock IV. hiring outside auditors to verify the accuracy of the company financial statements a. II and III only b. I and III only c. I and IV only d. III and IV only e. I, II, and IV only 2. When one shareholder sells stock directly to another the transaction is said to occur in the: 3. Which of the following are included in long term liabilities? I. note payable to a supplier in eighteen months II. debt payable to a mortgage company in nine months III. accounts payable to suppliers IV. loan payable to the bank in fourteen months
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