University of West Georgia

FINC MISC

Chapter 1

1)Money markets are markets for?

2. Which of the following factors would be most likely to lead to an increase in interest rates in the economy?
3. An agency relationship exists when one or more persons hire another person to perform some service but withhold decision- making authority from that person.
4. The problem of preventing managers from acting in their own best interests and instead acting in the best interests of the stockholders is the             ?
5. Which one of the following is a capital structure decision?
6. Why should financial managers strive to maximize the current value per share of the existing stock?
7. Which of the following statements is CORRECT?
8. Which of the following factors would be most likely to lead to an increase in interest rates in the economy?
9. Which of the following statements is CORRECT?
10. Which one of the following terms is defined as a conflict of interest between the corporate shareholders and the corporate managers?
11. You recently sold 200 shares of Apple stock. The transfer was made through a broker, and the trade occurred on the NYSE. This is an example of:
12. Which of the following is a primary market transaction?
13. Which of the following statements is most correct?
14. Which of the following is NOT normally regarded as being a good reason to establish an ESOP?
15. According to the book, the primary goal of a publicly-owned firm interested in serving its stockholders should be to:
16. Which of the following statements is CORRECT?
17. Which of the following could explain why a business might choose to operate as a corporation rather than as a sole proprietorship or a partnership?
18. Suppose the U.S. Treasury announces plans to issue $50 billion of new bonds. Assuming the announcement was not expected, what effect, other things held constant, would that have on bond prices and interest rates?
19. The          price reflects all relevant information.
20. Which of the following statements is true?
21. The primary operating goal of a publicly-owned firm interested in serving its stockholders should be to
22. Which of the following statements is CORRECT?
23. The major advantage of a regular partnership or a corporation as a form of business is the fact that both offer their owners limited liability, whereas proprietorships do not.

24. Jane Doe, who has substantial personal wealth and income, is considering the possibility of starting a new business in the chemical waste management field. She will be the sole owner, and she has enough funds to finance the operation. The business will have a relatively high degree of risk, and it is expected that the firm will incur losses for the first few years. However, the prospects for growth and positive future income look good, and Jane plans to have the firm pay out all of its income as dividends to her once it is well established. Which of the legal forms of business organization would probably best suit her needs?
25. The best definition below of a stakeholder is:
26. One key value of limited liability is that it lowers owners' risks and thereby enhances a firm's value.
27. A business partner whose potential financial loss in the partnership will not exceed his or her investment in that partnership is called a:
28. With which of the following statements would most people in business agree?
29. Which one of the following best states the primary goal of financial management?
30. Which of the following statements is CORRECT?
31. Which of the following statements is most correct?
32. Which one of the following is defined as a firm's short-term assets and its short-term liabilities?
33. Which one of the following terms is defined as the mixture of a firm's debt and equity financing?
34. Which of the following is NOT normally regarded as being a barrier to hostile takeovers?
35. The primary operating goal of a publicly-owned firm interested in serving its stockholders should be to
36. Which of the following statements is CORRECT?
37. Which of the following statements is CORRECT?
38. The key value of limited liability is that it lowers the risk faced by the firm's owners thereby enhancing the firm's value.
39. Which of the following statements is most correct?
40. A money market security is a debt instrument with a maturity no longer then         ?
41. The primary goal of a publicly-owned firm interested in serving its stockholders should be to:
42. Two disadvantages of a proprietorship are (1) the relative difficulty of raising new capital and (2) the owner's unlimited personal liability for the business' debts.
43. Which of the following statements is CORRECT?
44. Which of the following would be most likely to lead to higher interest rates on all debt securities in the economy