Chap001 - Chapter 01 Introduction to Financial Management...

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Chapter 01 - Introduction to Financial Management Chapter 01 Introduction to Financial Management Multiple Choice Questions 1. Tim has been promoted and is now in charge of all fixed asset purchases. In other words, Tim is in charge of: A. capital structure management. B. asset allocation. C. risk management. D. capital budgeting. E. working capital management. 2. Stadford, Inc. is financed with 40 percent debt and 60 percent equity. This mixture of debt and equity is referred to as the firm's: 3. Lester's BBQ has $121,000 in current assets and $109,000 in current liabilities. These values as referred to as the firm's: 1-1
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Chapter 01 - Introduction to Financial Management 4. Margie opened a used book store and is both the 100 percent owner and the store's manager. Which type of business entity does Margie own if she is personally liable for all the store's debts? 5. Will and Bill both enjoy sunshine, water, and surfboards. Thus, the two friends decided to create a business together renting surfboards, paddle boats, and inflatable devices in California. Will and Bill will equally share in the decision making and in the profits or losses. Which type of business did they create if they both have full personal liability for the firm's debts? A. Sole proprietorship B. Limited partnership C. Corporation D. Joint stock company E. General partnership 6. Todd and Cathy created a firm that is a separate legal entity and will share ownership of that firm on a 50/50 basis. Which type of entity did they create if they have no personal liability for the firm's debts? 7. The potential conflict of interest between a firm's owners and its managers is referred to as which type of conflict? 1-2
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Chapter 01 - Introduction to Financial Management 8. The federal government has a tax claim on the cash flows of The Window Store. This claim is defined as a claim by one of the firm's:
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