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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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