公司理财精要版原书第12版习题库答案Ross12e-Chapter01-TB-AnswerKey

FundamentalsofCorporateFinance,12e(Ross)

Chapter1IntroductiontoCorporateFinance

1)Whichoneofthefollowingfunctionsshouldbetheresponsibilityofthecontrollerratherthanthetreasurer?

A)Depositingcashreceipts

B)Processingcostreports

C)Analyzingequipmentpurchases

D)Approvingcreditforacustomer

E)Payingavendor

Answer:B

Difficulty:1Easy

Topic:Managementorganizationandroles

LearningObjective:01-01Definethebasictypesoffinancialmanagementdecisionsandtheroleofthefinancialmanager.

Bloom's:Understand

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

2)Thetreasurerofacorporationgenerallyreportsdirectlytothe:

A)boardofdirectors.

B)chairmanoftheboard.

C)chiefexecutiveofficer.

D)president.

E)vicepresidentoffinance.

Answer:E

Difficulty:1Easy

Topic:Managementorganizationandroles

LearningObjective:01-01Definethebasictypesoffinancialmanagementdecisionsandtheroleofthefinancialmanager.

Bloom's:Remember

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

3)Whichoneofthefollowingcorrectlydefinestheupwardchainofcommandinatypicalcorporateorganizationalstructure?

A)Thevicepresidentoffinancereportstothechairmanoftheboard.

B)Thechiefexecutiveofficerreportstothepresident.

C)Thecontrollerreportstothechieffinancialofficer.

D)Thetreasurerreportstothepresident.

E)Thechiefoperationsofficerreportstothevicepresidentofproduction.

Answer:C

Difficulty:1Easy

Topic:Managementorganizationandroles

LearningObjective:01-01Definethebasictypesoffinancialmanagementdecisionsandtheroleofthefinancialmanager.

Bloom's:Remember

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

4)Anexampleofacapitalbudgetingdecisionisdeciding:

A)howmanysharesofstocktoissue.

B)whetherornottopurchaseanewmachinefortheproductionline.

C)howtorefinanceadebtissuethatismaturing.

D)howmuchinventorytokeeponhand.

E)howmuchmoneyshouldbekeptinthecheckingaccount.

Answer:B

Difficulty:1Easy

Topic:Financialmanagementdecisions

LearningObjective:01-01Definethebasictypesoffinancialmanagementdecisionsandtheroleofthefinancialmanager.

Bloom's:Understand

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

5)Whenevaluatingthetimingofaproject'sprojectedcashflows,afinancialmanagerisanalyzing:

A)theamountofeachexpectedcashflow.

B)onlythestart-upcoststhatareexpectedtorequirecashresources.

C)onlythedateofthefinalcashflowrelatedtotheproject.

D)theamountbywhichcashreceiptsareexpectedtoexceedcashoutflows.

E)wheneachcashflowisexpectedtooccur.

Answer:E

Difficulty:1Easy

Topic:Financialmanagementdecisions

LearningObjective:01-01Definethebasictypesoffinancialmanagementdecisionsandtheroleofthefinancialmanager.

Bloom's:Understand

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

6)Capitalstructuredecisionsincludedetermining:

A)whichoneoftwoprojectstoaccept.

B)howtoallocateinvestmentfundstomultipleprojects.

C)theamountoffundsneededtofinancecustomerpurchasesofanewproduct.

D)howmuchdebtshouldbeassumedtofundaproject.

E)howmuchinventorywillbeneededtosupportaproject.

Answer:D

Difficulty:1Easy

Topic:Financialmanagementdecisions

LearningObjective:01-01Definethebasictypesoffinancialmanagementdecisionsandtheroleofthefinancialmanager.

Bloom's:Understand

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

7)Thedecisiontoissueadditionalsharesofstockisanexampleof:

A)workingcapitalmanagement.

B)anetworkingcapitaldecision.

C)capitalbudgeting.

D)acontroller'sduties.

E)acapitalstructuredecision.

Answer:E

Difficulty:1Easy

Topic:Financialmanagementdecisions

LearningObjective:01-01Definethebasictypesoffinancialmanagementdecisionsandtheroleofthefinancialmanager.

Bloom's:Understand

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

8)Whichoneofthefollowingquestionsisaworkingcapitalmanagementdecision?

A)Shouldthecompanyissuenewsharesofstockorborrowmoney?

B)Shouldthecompanyupdateorreplaceitsolderequipment?

C)Howmuchinventoryshouldbeonhandforimmediatesale?

D)Shouldthecompanycloseoneofitscurrentstores?

E)Howmuchshouldthecompanyborrowtobuyanewbuilding?

Answer:C

Difficulty:1Easy

Topic:Financialmanagementdecisions

LearningObjective:01-01Definethebasictypesoffinancialmanagementdecisionsandtheroleofthefinancialmanager.

Bloom's:Understand

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

9)Whichoneofthefollowingisaworkingcapitalmanagementdecision?

A)Whattype(s)ofequipmentis(are)neededtocompleteacurrentproject?

B)Shouldthefirmpaycashforapurchaseorusethecreditofferedbythesupplier?

C)Whatamountoflong-termdebtisrequiredtocompleteaproject?

D)Howmanysharesofstockshouldthefirmissuetofundanacquisition?

E)Shouldaprojectshouldbeaccepted?

Answer:B

Difficulty:1Easy

Topic:Financialmanagementdecisions

LearningObjective:01-01Definethebasictypesoffinancialmanagementdecisionsandtheroleofthefinancialmanager.

Bloom's:Understand

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

10)Workingcapitalmanagementdecisionsincludedetermining:

A)theminimumlevelofcashtobekeptinacheckingaccount.

B)thebestmethodofproducingaproduct.

C)thenumberofemployeesneededtoworkduringaparticularshift.

D)whentoreplaceobsoleteequipment.

E)ifacompetitorshouldbeacquired.

Answer:A

Difficulty:1Easy

Topic:Financialmanagementdecisions

LearningObjective:01-01Definethebasictypesoffinancialmanagementdecisionsandtheroleofthefinancialmanager.

Bloom's:Understand

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

11)Whichoneofthefollowingtermsisdefinedasthemanagementofafirm'slong-terminvestments?

A)Workingcapitalmanagement

B)Financialallocation

C)Agencycostanalysis

D)Capitalbudgeting

E)Capitalstructure

Answer:D

Difficulty:1Easy

Topic:Financialmanagementdecisions

LearningObjective:01-01Definethebasictypesoffinancialmanagementdecisionsandtheroleofthefinancialmanager.

Bloom's:Understand

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

12)Whichoneofthefollowingtermsisdefinedasthemixtureofafirm'sdebtandequityfinancing?

A)Workingcapitalmanagement

B)Cashmanagement

C)Costanalysis

D)Capitalbudgeting

E)Capitalstructure

Answer:E

Difficulty:1Easy

Topic:Financialmanagementdecisions

LearningObjective:01-01Definethebasictypesoffinancialmanagementdecisionsandtheroleofthefinancialmanager.

Bloom's:Understand

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

13)Afirm'sshort-termassetsanditsshort-termliabilitiesarereferredtoasthefirm's:

A)workingcapital.

B)debt.

C)investmentcapital.

D)netcapital.

E)capitalstructure.

Answer:A

Difficulty:1Easy

Topic:Financialmanagementdecisions

LearningObjective:01-01Definethebasictypesoffinancialmanagementdecisionsandtheroleofthefinancialmanager.

Bloom's:Remember

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

14)Whichoneofthefollowingquestionsisleastlikelytobeaddressedbyfinancialmanagers?

A)Howshouldaproductbemarketed?

B)Shouldcustomersbegiven30or45daystopayfortheircreditpurchases?

C)Shouldthefirmborrowmoremoney?

D)Shouldthefirmacquirenewequipment?

E)Howmuchcashshouldthefirmkeeponhand?

Answer:A

Difficulty:1Easy

Topic:Financialmanagementdecisions

LearningObjective:01-01Definethebasictypesoffinancialmanagementdecisionsandtheroleofthefinancialmanager.

Bloom's:Understand

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

15)Abusinessownedbyasolitaryindividualwhohasunlimitedliabilityforthefirm'sdebtiscalleda:

A)corporation.

B)soleproprietorship.

C)generalpartnership.

D)limitedpartnership.

E)limitedliabilitycompany.

Answer:B

Difficulty:1Easy

Topic:Formsofbusinessorganization

LearningObjective:01-03Articulatethefinancialimplicationsofthedifferentformsofbusinessorganization.

Bloom's:Understand

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

16)Abusinessformedbytwoormoreindividualswhoeachhaveunlimitedliabilityforallofthefirm'sbusinessdebtsiscalleda:

A)corporation.

B)soleproprietorship.

C)generalpartnership.

D)limitedpartnership.

E)limitedliabilitycompany.

Answer:C

Difficulty:1Easy

Topic:Formsofbusinessorganization

LearningObjective:01-03Articulatethefinancialimplicationsofthedifferentformsofbusinessorganization.

Bloom's:Understand

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

17)Abusinesspartnerwhosepotentialfinanciallossinthepartnershipwillnotexceedhisorherinvestmentinthatpartnershipiscalleda:

A)generalpartner.

B)soleproprietor.

C)limitedpartner.

D)corporateshareholder.

E)zeropartner.

Answer:C

Difficulty:1Easy

Topic:Formsofbusinessorganization

LearningObjective:01-03Articulatethefinancialimplicationsofthedifferentformsofbusinessorganization.

Bloom's:Understand

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

18)Abusinesscreatedasadistinctlegalentityandtreatedasalegal"person"iscalleda(n):

A)corporation.

B)soleproprietorship.

C)generalpartnership.

D)limitedpartnership.

E)unlimitedliabilitycompany.

Answer:A

Difficulty:1Easy

Topic:Formsofbusinessorganization

LearningObjective:01-03Articulatethefinancialimplicationsofthedifferentformsofbusinessorganization.

Bloom's:Understand

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

19)Whichoneofthefollowingstatementsconcerningasoleproprietorshipiscorrect?

A)Asoleproprietorshipisdesignedtoprotectthepersonalassetsoftheowner.

B)Theprofitsofasoleproprietorshiparesubjecttodoubletaxation.

C)Theownerofasoleproprietorshipispersonallyresponsibleforallofthecompany'sdebts.

D)ThereareveryfewsoleproprietorshipsremainingintheU.S.today.

E)Asoleproprietorshipisstructuredthesameasalimitedliabilitycompany.

Answer:C

Difficulty:1Easy

Topic:Formsofbusinessorganization

LearningObjective:01-03Articulatethefinancialimplicationsofthedifferentformsofbusinessorganization.

Bloom's:Understand

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

20)Whichoneofthefollowingstatementsconcerningasoleproprietorshipiscorrect?

A)Thelifeofasoleproprietorshipislimited.

B)Asoleproprietorcangenerallyraiselargesumsofcapitalquiteeasily.

C)Transferringownershipofasoleproprietorshipiseasierthantransferringownershipofacorporation.

D)AsoleproprietorshipistaxedthesameasaCcorporation.

E)Asoleproprietorshipisthemostregulatedformoforganization.

Answer:A

Difficulty:1Easy

Topic:Formsofbusinessorganization

LearningObjective:01-03Articulatethefinancialimplicationsofthedifferentformsofbusinessorganization.

Bloom's:Understand

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

21)Whichofthefollowingindividualshaveunlimitedliabilityforafirm'sdebtsbasedontheirownershipinterest?

A)Onlygeneralpartners

B)Onlysoleproprietors

C)Allstockholders

D)Bothlimitedandgeneralpartners

E)Bothgeneralpartnersandsoleproprietors

Answer:E

Difficulty:1Easy

Topic:Formsofbusinessorganization

LearningObjective:01-03Articulatethefinancialimplicationsofthedifferentformsofbusinessorganization.

Bloom's:Understand

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

22)Theprimaryadvantageofbeingalimitedpartneris:

A)thereceiptoftax-freeincome.

B)thepartner'sactiveparticipationinthefirm'sactivities.

C)thelackofanypotentialfinancialloss.

D)thedailycontroloverthebusinessaffairsofthepartnership.

E)thepartner'smaximumlossislimitedtotheircapitalinvestment.

Answer:E

Difficulty:1Easy

Topic:Formsofbusinessorganization

LearningObjective:01-03Articulatethefinancialimplicationsofthedifferentformsofbusinessorganization.

Bloom's:Understand

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

23)Ageneralpartner:

A)ispersonallyresponsibleforallpartnershipdebts.

B)hasnosayoverafirm'sdailyoperations.

C)facesdoubletaxationwhereasalimitedpartnerdoesnot.

D)hasamaximumlossequaltohisorherequityinvestment.

E)receivesasalaryinlieuofaportionoftheprofits.

Answer:A

Difficulty:1Easy

Topic:Formsofbusinessorganization

LearningObjective:01-03Articulatethefinancialimplicationsofthedifferentformsofbusinessorganization.

Bloom's:Understand

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

24)Alimitedpartnership:

A)hasanunlimitedlife.

B)canopttobetaxedasacorporation.

C)terminatesatthedeathofanyonelimitedpartner.

D)hasatleastonepartnerwhohasunlimitedliabilityforallofthepartnership'sdebts.

E)consistssolelyoflimitedpartners.

Answer:D

Difficulty:1Easy

Topic:Formsofbusinessorganization

LearningObjective:01-03Articulatethefinancialimplicationsofthedifferentformsofbusinessorganization.

Bloom's:Understand

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

25)Apartnershipwithfourgeneralpartners:

A)distributesprofitsbasedonpercentageofownership.

B)hasanunlimitedpartnershiplife.

C)limitstheactiveinvolvementinthefirmtoasinglepartner.

D)limitseachpartner'spersonalliabilityto25percentofthepartnership'stotaldebt.

E)mustdistribute25percentoftheprofitstoeachpartner.

Answer:E

Difficulty:1Easy

Topic:Formsofbusinessorganization

LearningObjective:01-03Articulatethefinancialimplicationsofthedifferentformsofbusinessorganization.

Bloom's:Understand

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

26)Onedisadvantageofthecorporateformofbusinessownershipisthe:

A)limitedliabilityofitsshareholdersforthefirm'sdebts.

B)doubletaxationofdistributedprofits.

C)firm'sgreaterabilitytoraisecapitalthanotherformsofownership.

D)firm'spotentialforanunlimitedlife.

E)firm'sabilitytoissueadditionalsharesofstock.

Answer:B

Difficulty:1Easy

Topic:Formsofbusinessorganization

LearningObjective:01-03Articulatethefinancialimplicationsofthedifferentformsofbusinessorganization.

Bloom's:Understand

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

27)Whichoneofthefollowingstatementsiscorrect?

A)ThemajorityoffirmsintheU.S.arestructuredascorporations.

B)Corporateprofitsaretaxableincometotheshareholderswhenearned.

C)Corporationscanhaveanunlimitedlife.

D)Shareholdersareprotectedfromallpotentiallosses.

E)Shareholdersdirectlyelectthecorporatepresident.

Answer:C

Difficulty:1Easy

Topic:Formsofbusinessorganization

LearningObjective:01-03Articulatethefinancialimplicationsofthedifferentformsofbusinessorganization.

Bloom's:Understand

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

28)Whichoneofthefollowingstatementsiscorrect?

A)Ageneralpartnershipislegallythesameasacorporation.

B)Incomefrombothsoleproprietorshipsandpartnershipsthatistaxableistreatedasindividualincome.

C)Partnershipsarethemostcomplicatedtypeofbusinesstoform.

D)Allbusinessorganizationshavebylaws.

E)Onlyfirmsorganizedassoleproprietorshipshavelimitedlives.

Answer:B

Difficulty:1Easy

Topic:Formsofbusinessorganization

LearningObjective:01-03Articulatethefinancialimplicationsofthedifferentformsofbusinessorganization.

Bloom's:Understand

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

29)Thearticlesofincorporation:

A)describethepurposeofthefirmandsetforththenumberofsharesofstockthatcanbeissued.

B)areamendedperiodicallyespeciallypriortocorporateelections.

C)explainhowcorporatedirectorsaretobeelectedandthelengthoftheirterms.

D)setsforththeproceduresbywhichafirmregulatesitself.

E)includeonlythecorporation'snameandintendedlife.

Answer:A

Difficulty:1Easy

Topic:Formsofbusinessorganization

LearningObjective:01-03Articulatethefinancialimplicationsofthedifferentformsofbusinessorganization.

Bloom's:Understand

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

30)Corporatebylaws:

A)mustbeamendedshouldafirmdecidetoincreasethenumberofsharesauthorized.

B)cannotbeamendedonceadopted.

C)definethenamebywhichthefirmwilloperate.

D)describetheintendedlifeandpurposeoftheorganization.

E)determinehowacorporationregulatesitself.

Answer:E

Difficulty:1Easy

Topic:Formsofbusinessorganization

LearningObjective:01-03Articulatethefinancialimplicationsofthedifferentformsofbusinessorganization.

Bloom's:Understand

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

31)Alimitedliabilitycompany:

A)canonlyhaveasingleowner.

B)iscomprisedoflimitedpartnersonly.

C)istaxedsimilartoapartnership.

D)istaxedsimilartoaCcorporation.

E)generatestotallytax-freeincome.

Answer:C

Difficulty:1Easy

Topic:Formsofbusinessorganization

LearningObjective:01-03Articulatethefinancialimplicationsofthedifferentformsofbusinessorganization.

Bloom's:Understand

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

32)Whichbusinessformisbestsuitedtoraisinglargeamountsofcapital?

A)Soleproprietorship

B)Limitedliabilitycompany

C)Corporation

D)Generalpartnership

E)Limitedpartnership

Answer:C

Difficulty:1Easy

Topic:Formsofbusinessorganization

LearningObjective:01-03Articulatethefinancialimplicationsofthedifferentformsofbusinessorganization.

Bloom's:Understand

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

33)A________hasalltherespectiverightsandprivilegesofalegalperson.

A)soleproprietorship

B)generalpartnership

C)limitedpartnership

D)corporation

E)limitedliabilitycompany

Answer:D

Difficulty:1Easy

Topic:Formsofbusinessorganization

LearningObjective:01-03Articulatethefinancialimplicationsofthedifferentformsofbusinessorganization.

Bloom's:Understand

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

34)Sam,Alfredo,andJuanwanttostartasmallU.S.business.Juanwillfundtheventurebutwantstolimithisliabilitytohisinitialinvestmentandhasnointerestinthedailyoperations.Samwillcontributehisfulleffortsonadailybasisbuthaslimitedfundstoinvestinthebusiness.Alfredowillbeinvolvedasanactiveconsultantandmanagerandwillalsocontributefunds.SamandAlfredoarewillingtoacceptliabilityforthefirm'sdebtsastheyfeeltheyhavenothingtolosebydoingso.Allthreeindividualswillshareinthefirm'sprofitsandwishtokeeptheinitialorganizationalcostsofthebusinesstoaminimum.Whichformofbusinessentityshouldtheseindividualsadopt?

A)Soleproprietorship

B)Jointstockcompany

C)Limitedpartnership

D)Generalpartnership

E)Corporation

Answer:C

Difficulty:2Medium

Topic:Formsofbusinessorganization

LearningObjective:01-03Articulatethefinancialimplicationsofthedifferentformsofbusinessorganization.

Bloom's:Apply

AACSB:KnowledgeApplication

Accessibility:KeyboardNavigation

35)SallyandAliciaareequalgeneralpartnersinabusiness.Theyarecontentwiththeircurrentmanagementandtaxsituationbutareuncomfortablewiththeirunlimitedliability.Whichformofbusinessentityshouldtheyconsiderasareplacementtotheircurrentarrangementassumingtheywishtoremaintheonlytwoownersofthebusiness?

A)Soleproprietorship

B)Jointstockcompany

C)Limitedpartnership

D)Limitedliabilitycompany

E)Corporation

Answer:D

Difficulty:2Medium

Topic:Formsofbusinessorganization

LearningObjective:01-03Articulatethefinancialimplicationsofthedifferentformsofbusinessorganization.

Bloom's:Apply

AACSB:KnowledgeApplication

Accessibility:KeyboardNavigation

36)Thegrowthofbothsoleproprietorshipsandpartnershipsisfrequentlylimitedbythefirm's:

A)doubletaxation.

B)bylaws.

C)inabilitytoraisecash.

D)limitedliability.

E)agencyproblems.

Answer:C

Difficulty:1Easy

Topic:Formsofbusinessorganization

LearningObjective:01-03Articulatethefinancialimplicationsofthedifferentformsofbusinessorganization.

Bloom's:Understand

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

37)Corporatedividendsare:

A)tax-freebecausetheincomeistaxedatthepersonallevelwhenearnedbythefirm.

B)tax-freebecausetheyaredistributionsofaftertaxincome.

C)tax-freesincethecorporationpaystaxonthatincomewhenitisearned.

D)taxedatboththecorporateandthepersonallevelwhenthedividendsarepaidtoshareholders.

E)taxableincomeoftherecipienteventhoughthatincomewaspreviouslytaxed.

Answer:E

Difficulty:1Easy

Topic:Formsofbusinessorganization

LearningObjective:01-03Articulatethefinancialimplicationsofthedifferentformsofbusinessorganization.

Bloom's:Understand

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

38)Financialmanagersshouldprimarilyfocusontheinterestsof:

A)stakeholders.

B)thevicepresidentoffinance.

C)theirimmediatesupervisor.

D)shareholders.

E)theboardofdirectors.

Answer:D

Difficulty:1Easy

Topic:Goaloffinancialmanagement

LearningObjective:01-02Explainthegoaloffinancialmanagement.

Bloom's:Understand

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

39)Whichoneofthefollowingbeststatestheprimarygoaloffinancialmanagement?

A)Maximizecurrentdividendspershare

B)Maximizethecurrentvaluepershare

C)Increasecashflowandavoidfinancialdistress

D)Minimizeoperationalcostswhilemaximizingfirmefficiency

E)Maintainsteadygrowthwhileincreasingcurrentprofits

Answer:B

Difficulty:1Easy

Topic:Goaloffinancialmanagement

LearningObjective:01-02Explainthegoaloffinancialmanagement.

Bloom's:Remember

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

40)Whichoneofthefollowingbestillustratesthatthemanagementofafirmisadheringtothegoaloffinancialmanagement?

A)Anincreaseintheamountofthequarterlydividend

B)Adecreaseintheperunitproductioncosts

C)Anincreaseinthenumberofsharesoutstanding

D)Adecreaseinthenetworkingcapital

E)Anincreaseinthemarketvaluepershare

Answer:E

Difficulty:1Easy

Topic:Goaloffinancialmanagement

LearningObjective:01-02Explainthegoaloffinancialmanagement.

Bloom's:Understand

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

41)Financialmanagersshouldstrivetomaximizethecurrentvaluepershareoftheexistingstockto:

A)guaranteethecompanywillgrowinsizeatthemaximumpossiblerate.

B)increaseemployeesalaries.

C)bestrepresenttheinterestsofthecurrentshareholders.

D)increasethecurrentdividendspershare.

E)providemanagerswithsharesofstockaspartoftheircompensation.

Answer:C

Difficulty:1Easy

Topic:Goaloffinancialmanagement

LearningObjective:01-02Explainthegoaloffinancialmanagement.

Bloom's:Understand

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

42)Decisionsmadebyfinancialmanagersshouldprimarilyfocusonincreasingthe:

A)sizeofthefirm.

B)growthrateofthefirm.

C)grossprofitperunitproduced.

D)marketvaluepershareofoutstandingstock.

E)totalsales.

Answer:D

Difficulty:1Easy

Topic:Goaloffinancialmanagement

LearningObjective:01-02Explainthegoaloffinancialmanagement.

Bloom's:Understand

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

43)TheSarbanes-OxleyActof2002isagovernmentalresponseto:

A)decreasingcorporateprofits.

B)theterroristattackson9/11/2001.

C)aweakeningeconomy.

D)deregulationofthestockexchanges.

E)managementgreedandabuses.

Answer:E

Difficulty:1Easy

Topic:Ethics,governance,andregulation

LearningObjective:01-04Explaintheconflictsofinterestthatcanarisebetweenmanagersandowners.

Bloom's:Understand

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

44)WhichoneofthefollowingisanunintendedresultoftheSarbanes-OxleyAct?

A)Moredetailedandaccuratefinancialreporting

B)Increasedmanagementawarenessofinternalcontrols

C)Corporationsdelistingfrommajorexchanges

D)Increasedresponsibilityforcorporateofficers

E)Identificationofinternalcontrolweaknesses

Answer:C

Difficulty:1Easy

Topic:Ethics,governance,andregulation

LearningObjective:01-04Explaintheconflictsofinterestthatcanarisebetweenmanagersandowners.

Bloom's:Understand

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

45)Afirmwhichoptsto"godark"inresponsetotheSarbanes-OxleyAct:

A)mustcontinuetoprovideauditedfinancialstatementstothepublic.

B)mustcontinuetoprovideadetailedlistofinternalcontroldeficienciesonanannualbasis.

C)canprovidelessinformationtoitsshareholdersthanitdidpriorto"goingdark".

D)cancontinuepubliclytradingitsstockbutonlyontheexchangeonwhichitwaspreviouslylisted.

E)ceasestoexist.

Answer:C

Difficulty:1Easy

Topic:Ethics,governance,andregulation

LearningObjective:01-04Explaintheconflictsofinterestthatcanarisebetweenmanagersandowners.

Bloom's:Understand

AACSB:ReflectiveThinking

Accessibility:KeyboardNavigation

46)TheSarbanes-OxleyActof2002holdsapubliccompany's________responsiblefortheaccuracyofthecompany'sfinancialstatements.

A)managers

B)internalauditors

C)externallegalcounsel

D)internallegalcounsel

E)SecuritiesandExchangeCommissionagent

Answer:A

Difficulty:1Easy

Topic:Ethics,governance,andregulation

LearningObjective:01-04Explaintheconflictsofinterestthatcan