RIVESexam1PracticeQuestions

RIVESexam1PracticeQuestions - Business Finance 620 Exam 1...

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1 Business Finance 620 Exam 1 Practice Questions 1 Chapter 1+2 Review Which of the following statements about the corporate form of organization is correct? A. When a corporation fails, shareholders cannot lose more than the amount of their personal wealth. B. Once a business has been incorporated, its shares can be sold to the public. C. Shareholders of a public company that pays a cash dividend are subject to double taxation. D. In the wake of Sarbannes-Oxley, a company’s CEO and its CFO may not serve on the company’s board of directors. 2
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2 Chapter 1+2 Review All the following statements concerning financial markets are correct EXCEPT: A. Capital markets include markets for long-term bonds and commercial paper. B. IPO shares are always issued in the primary market. C. Financial intermediaries can trade shares of stock in the secondary market. D. Financial markets provide liquidity so that the shares D. Financial markets provide liquidity so that the shares of public companies can trade at any time during the trading day. 3 Chapter 1+2 Review You sell 250 shares of GE common stock for $15.50 a share. You paid $19.80 a share when you bought the stock nine months ago. How much does the company receive from the sale (ignoring brokerage fees)? A. Nothing, because the company is not a party to the transaction B. $3,875 C. The standard 5% fee set by the SEC D. Nothing, because the sale represents a capital loss 4
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3 Chapter 1+2 Review You are one of 4 general partners in a landscaping firm. The firm was sued for mistakenly chopping down a 100- year old tree on a customer’s property. The judge ruled in the plaintiff’s favor and fined your company $100,000. What is the limit of your personal liability for this award? A. You could not be asked to pay more than $25,000, assuming you and your partners are equal partners. B. If you were not involved in chopping down the tree, you would not be responsible for any of the award. C. If the partnership cannot pay the award, then none of the partners could be held personally liable. D. You could be asked to pay the entire $100,000. 5 Chapter 3 Review All the following transactions represent a use of cash by the firm EXCEPT: A. Increase in accounts payable B. Increase in inventories C. Repurchase of common stock D. Increase in accounts receivable 6
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4 Chapter 3 Review The following table shows 2009 US corporate income tax rates for taxable incomes less than or equal to $100,000: How much tax would be paid by a company with a taxable income of $93,000?
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This note was uploaded on 03/10/2012 for the course BUS-FIN 620 taught by Professor Busfin620 during the Spring '12 term at Ohio State.

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RIVESexam1PracticeQuestions - Business Finance 620 Exam 1...

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