e3083 - Concordia University Department of Finance, John...

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Concordia University Department of Finance, John Molson School of Business Commerce 308 - Homework No. 1 (Winter 2003) Due Date: Tuesday, February 25, 2003 Dr. Thomas Walker C OMMERCE 308 - H OMEWORK N O . 1 Chapter 1: 1. A business owned by a single individual is called a(n): A) Corporation. B) Sole proprietorship. C) Partnership. D) Closed receivership. E) Open structure. 2. Agency costs refer to: A) The total dividends paid to shareholders over the lifetime of the firm. B) The costs that result from default and bankruptcy of the firm. C) Corporate income subject to double taxation. D) The costs of the conflict of interest between stockholders and management. E) The total interest paid to creditors over the lifetime of the firm. 3. Which of the following is an advantage of ownership of a corporation compared to that of a sole proprietorship? A) The owners of the corporation have unlimited liability for the firm's debts. B) It is the simplest to start. C) The corporation has an unlimited life. D) Dividends received by the corporation's shareholders are tax-exempt. E) It is more difficult to transfer ownership in a corporation. 4. In the evaluation of cash flow in a capital budgeting decision, which of the following must be considered? I. The size of the cash flow. II. The timing of the cash flow. III. The risk of the cash flow. A) I only B) I and II only C) II only D) II and III only E) I, II, III 5. A business formed by two or more individuals or entities is called a(n): A) Corporation. B) Sole proprietorship. C) Partnership. D) Closed receivership. E) Open structure. P AGE 1
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Concordia University Department of Finance, John Molson School of Business Commerce 308 - Homework No. 1 (Winter 2003) Due Date: Tuesday, February 25, 2003 Dr. Thomas Walker 6. The purchase and sale of securities after the original issuance occurs in the: A) Primary market. B) Secondary market. C) Dealer market. D) Auction market. E) Liquidation market. 7. Which of the following is the BEST description of the goal of the financial manager in a corporation where shares are publicly traded? A) Maximize sales. B) Maximize profits. C) Avoid financial distress. D) Maintain steady earnings growth. E) Maximize the current value per share of the existing stock. 8. A ________________ can lose, at most, what she has already invested in a firm. I. common stockholder II. limited partner III. general partner IV. sole proprietor A) I only B) I and II only C) I, II, and IV only D) II, III, and IV only E) II and III only P AGE 2
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Concordia University Department of Finance, John Molson School of Business Commerce 308 - Homework No. 1 (Winter 2003) Due Date: Tuesday, February 25, 2003 Dr. Thomas Walker Chapter 5: 9. Which of the following statements is/are accurate? All else the same, ______________. I. present values increase as the discount rate increases
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This note was uploaded on 07/12/2009 for the course ECN 1211 taught by Professor Maloney during the Spring '09 term at Fairleigh Dickinson.

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e3083 - Concordia University Department of Finance, John...

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