Study%20Guide%20-%20Exam%201 - Study Guide Exam 1 FIN 355...

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Unformatted text preview: Study Guide Exam 1 FIN 355 Principles of Finance Multiple Choice: True/False Please note that some of the T/F questions overlap with some of the multiple choice items. (1-1) Role of finance F M i. In most corporations, the CFO ranks under the CEO. a. True b. False (1-1) Role of finance F M ii. The Chairman of the Board must also be the CEO. a. True b. False (1-3) Forms of organization F M iii. Partnerships and proprietorships generally have a tax advantage over corporations. a. True b. False (1-3) Forms of organization F M iv. An advantage of the corporate form of organization is that corporations are generally less highly regulated than proprietorships and partnerships. a. True b. False (1-3) Forms of organization F M v. Some partners in a partnership may have different rights, privileges, and responsibilities than other partners. a. True b. False (1-3) Forms of organization F M vi. One advantage of the corporate form of organization is that it avoids double taxation. a. True b. False (1-3) Forms of organization F M vii. It is generally harder to transfer ones ownership interest in a partnership than in a corporation. a. True b. False (1-3) Forms of organization F M viii. The more capital a firm is likely to require, the greater the probability that it will be organized as a corporation. a. True b. False (1-3) Forms of organization F M ix. One disadvantage of forming a corporation rather than a partnership is that this makes it more difficult for the firms investors to transfer their ownership interests. a. True b. False (1-3) Forms of organization F M x. Organizing as a corporation makes it easier for the firm to raise capital. This is because corporations' stockholders are not subject to personal liabilities if the firm goes bankrupt and also because it is easier to transfer shares of stock than partnership interests. a. True b. False (1-5) Intrinsic values F M xi. If management operates in a manner designed to maximize the firm's expected profits for the current year, this will also maximize the stockholders' wealth as of the current year. a. True b. False (1-6) Important trends E F M xii. Globalization of business has been facilitated by improvements in telecommunications. a. True b. False (1-7) Business ethics B F M xiii. The bankruptcy of Enron Corporation, and the fraud committed by some of its officers, has led to some important changes in business practices. a. True b. False Multiple Choice: Conceptual (1-3) Forms of organization F M xiv. Which of the following statements is CORRECT? a. One of the disadvantages of incorporating your business is that you could become subject to the firm's liabilities in the event of bankruptcy....
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Study%20Guide%20-%20Exam%201 - Study Guide Exam 1 FIN 355...

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