Answer Key to Midterm 1

Answer Key to Midterm 1 - Midterm 1 Managerial Finance, FRL...

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Midterm 1 Managerial Finance, FRL 300 February 1, 2010 1. Which one of the following terms is defined as a conflict of interest between the corporate shareholders and the corporate managers? A. articles of incorporation B. corporate breakdown SECTION A: Multiple Choices (1 point each) C. agency problem 2. Which one of the following statements concerning a sole proprietorship is correct? A. A sole proprietorship is designed to protect the personal assets of the owner. B. The profits of a sole proprietorship are subject to double taxation. D. bylaws E. legal liability C. The owner of a sole proprietorship is personally responsible for all of the company's debts. 3. Why should financial managers strive to maximize the current value per share of the existing stock? A. doing so guarantees the company will grow in size at the maximum possible rate B. doing so increases employee salaries D. There are very few sole proprietorships remaining in the U.S. today. E. A sole proprietorship is structured the same as a limited liability company. C. because they have been hired to represent the interests of the current shareholders 4. Which one of the following parties has ultimate control of a corporation? A. chairman of the Board B. board of directors C. chief executive officer D. chief operating office D. because this will increase the current dividends per share E. because managers often receive shares of stock as part of their compensation E. shareholders 5. Which one of the following is a primary market transaction? A. sale of currently outstanding stock by a dealer to an individual investor B. sale of a new share of stock to an individual investor C. stock ownership transfer from one shareholder to another shareholder D. gift of stock from one shareholder to another shareholder E. gift of stock by a shareholder to a family member 6. Which one of the following is the financial statement that shows the accounting value of a firm's equity as of a particular date? A. income statement
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Answer Key to Midterm 1 - Midterm 1 Managerial Finance, FRL...

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