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Unformatted text preview: MGT 3062 EXAM 1 SPRING 2009 VER 1 Student: ID: Write your answer on the answer sheet provided. Round percentages to 2 decimal places (0.00%) and round dollar figures to the nearest penny. For computational questions, show your work (for possible partial credit). All rates are annualized rates unless stated otherwise. Remove all hats and dark glasses. If you have to go to the restroom, go now. No electronic devices, besides a calculator, are allowed. You may not use your cell phone as a calculator. As a courtesy to your classmates, no questions are allowed after the initial instructions are given. There are 115 total points available. A grade of ‘A” is assigned for 90 points or better. If you do not look like your Buzz Card ID picture, you may be asked for photo identification. Ethics Challenge: I swear by everything I hold sacred and my family honor that: the work on this exam is my own without any outside assistance; that I did not provide assistance to another classmate; that I used no electronic devices for information storage, retrieval, or communications; that I have abided by the Georgia Tech honor code in the preparation and execution of this exam . Signature: _____________________________ PART 1: Multiple Choice (2 points each) Choose the BEST answer to each of the following multiple choice questions. If you think that the answer is not provided, then write your answer on the answer sheet with supporting reasoning and assumptions. 1. Which form(s) of business organization(s) have a life span not limited to the life of its owners, with earnings subject to double taxation? A. Multinational Corporation. B. Limited Partnership. C. Sole Proprietorship. D. Limited Liability Company. E. A and D are correct 2. Which one of the following actions by a financial manager creates an agency problem? A. agreeing to pay bonuses based on the market value of the company stock B. refusing to lower selling prices if doing so will reduce the net profits C. refusing to borrow money when doing so will create losses for the firm D. agreeing to expand the company at the expense of stockholders' value E. increasing current costs in order to increase the market value of the stockholders' equity 3. The original sale of securities by a governmental body or a corporation is a__________ transaction. Subsequent sales and purchases (i.e., from one investor to another) are ___________ transaction. A. primary market; dealer market. B. dealer market; auction market. C. primary market; secondary market. D. auction market; secondary market. E. primary market; agency. 4. The primary goal of financial management is to: A. maintain steady growth in both sales and net earnings....
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