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FINA 3313 Homework 1

FINA 3313 Homework 1 - FINA3313-031 Business Finance Spring...

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FINA3313-031 Business Finance, Spring 2006 Homework 1 Due by February 10, 2006. Instructor: Bing Y. Du I Please mark your answers on the SCANTRON (form 882) correspondingly and only submit the scantron. s Please write your name, last 4 digits of SSN, and “Homework1” on your scantorn. P Late submission will not be accepted. Homework 1 CH1 Firm and Financial Manager (Question 1-19) 1. The liability of general partner is limited to the amount of their investment in the company. A. True B. False. 2. Agency problem in corporate business organization is generated by the separation of management and ownership. A. True B. False. 3. A successful investment is worth more than its cost. A. True B. False. 4. General Motor’s new opening of an assembly line in Arlington is a financing decision. A. True B. False. 5. A partnership business is a legal entity, thus it is double taxed. A. True B. False. 6. Agency problems will be an obstacle to achieving a firm’s goal. A. True B. False. Page 1
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7. Lenders such as banks or insurance companies are involved in monitoring and controlling the risk associated with investment projects and financing decisions. A. True B. False. 8. Both Patents and trade marks are financial assets. A. True B. False. 9. The goal of the firm is to maximize the profits. A. True B. False. 10. One common reason for partnerships to convert to a corporate form of organization is that the partnership: A) faces rapidly growing financing requirements. B) wishes to avoid double taxation of profits. C) has issued all of its allotted shares. D) agreement expires after ten years of use. 11. When a sole proprietorship business fails, the maximum that can lost by an investor is:
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12. The legal “life” of a corporation is: 13. Which of the following would not be considered a financial asset? 14. A financial manager facing a financing decision must decide whether to: A) Keep an assembly line idle for another three months. B) use the money market or capital market. C) Build a new plant in Mexico. D) buy new machinery or repair the old.
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