FINANCE I Multiple Choice Chapters 1,2,&3 BB.docx -...

Multiple Choice Chapter’s 1 to 3
1. A stakeholder is:
A. Any person or entity that owns shares of stock of a corporation.
B. Any person or entity that has voting rights based on stock ownership of a corporation.
C. A person who initially started a firm and currently has management control over the cash
flows of the firm due to his/her current ownership of company stock.
D. Any person or entity who potentially has a claim on the cash flows of the firm.
2. An agency problem is said to exist when there is a conflict of interest between _____ and
_____.
3. Which one of the following statements concerning a proprietorship is true?
4. You are interested in purchasing 100 shares of stock in one of the largest corporations in the
Canada. You would most likely purchase the shares in _______________.

5. Which one of the following is a correct statement concerning a sole proprietorship?
A. A sole proprietorship is relatively difficult to form.
B. The profits earned by a sole proprietorship are subject to double taxation.
C. A sole proprietorship is more highly regulated than a corporation.
D. It may be difficult to transfer the ownership of a sole proprietorship.
6. What is the difference between third and fourth markets?