FINC/320 FINC620 FINC 620 WEEK 1 QUIZ

FINC 620 WEEK 1 QUIZ

  • Question 1
   
 

In a limited partnership:

      
   

Answers:

A. each limited partner's liability is limited to his net worth.
 

 

B. each limited partner's liability is limited to the amount he put into the partnership.
 

C. each limited partner's liability is limited to his annual salary.
 

D. there is no limitation on liability; only a limitation on what the partner can earn.
 

E. None of these.
     
  • Question 2
   
 

The treasurer and the controller of a corporation generally report to the:

      
   

Answers:

A. board of directors.
 

B. chairman of the board.
 

C. chief executive officer.
 

D. president.
 

 

E. chief financial officer.
     
  • Question 3
   
 

The division of profits and losses among the members of a partnership is formalized in the:

      
   

Answers:

A. indemnity clause.
 

B. indenture contract.
 

C. statement of purpose.
 

 

D. partnership agreement.
 

E. group charter.
     
  • Question 4
   
 

Which one of the following best describes the primary advantage of being a limited partner rather than a general partner?

      
   

Answers:

A. Entitlement to a larger portion of the partnership's income
 

B. Ability to manage the day-to-day affairs of the business
 

C. No potential financial loss
 

D. Greater management responsibility
 

 

E. Liability for firm debts limited to the capital invested
     
  • Question 5
 

The management of a firm's short-term assets and liabilities is called:

      
   

Answers:

 

A. working capital management.
 

B. debt management.
 

C. equity management.
 

D. capital budgeting.
 

E. capital structure.
     
  • Question 6
   
 

Since the implementation of Sarbanes-Oxley, the cost of going public in the United States has:

      
   

Answers:

 

A. increased.
 

B. decreased.
 

C. remained about the same.
 

D. been erratic, but over time has decreased.
 

E. It is impossible to tell since Sarbanes-Oxley compliance does not involve direct cost to the firm.
     
  • Question 7
 

Which one of the following is a capital budgeting decision?

      
   

Answers:

A. Determining how much debt should be borrowed from a particular lender
 

 

B. Deciding whether or not to open a new store
 

C. Deciding when to repay a long-term debt
 

D. Determining how much inventory to keep on hand
 

E. Determining how much money should be kept in the checking account
     
  • Question 8
   
 

Financial managers should strive to maximize the current value per share of the existing stock because:

      
   

Answers:

A. doing so guarantees the company will grow in size at the maximum possible rate.
 

B. doing so increases the salaries of all the employees.
 

 

C. the current stockholders are the owners of the corporation.
 

D. doing so means the firm is growing in size faster than its competitors.
 

E. the managers often receive shares of stock as part of their compensation.
     
  • Question 9
   
 

One of the reasons why cash flow analysis is popular is because:

      
   

Answers:

A. cash flows are more subjective than net income.
 

B. cash flows are hard to understand.
 

C. it is easy to manipulate, or spin the cash flows.
 

 

D. it is difficult to manipulate, or spin the cash flows.
 

E. None of these.
     
  • Question 10
   
 

When you are making a financial decision, the most relevant tax rate is the __________ rate.

      
   

Answers:

A. average
 

B. fixed
 

 

C. Marginal
 

D. total
 

E. Variable
     
  • Question 11
   
 

Your _____ tax rate is the total taxes you pay divided by your taxable income.

      
   

Answers:

A. deductible
 

B. residual
 

C. total
 

 

D. Average
 

E. Marginal
     
  • Question 12
   
 

At the beginning of the year, a firm has current assets of $420 and current liabilities of $380. At the end of the year, the current assets are $500 and the current liabilities are $410. What is the change in net working capital?

      
   

Answers:

A. -$80
 

B. -$50
 

C. $0
 

 

D. $50
 

E. $80
     
  • Question 13
   
 

_____ refers to the difference between a firm's current assets and its current liabilities.

      
   

Answers:

A. Operating cash flow
 

B. Capital spending
 

 

C. Net working capital
 

D. Cash flow from assets
 

E. Cash flow to creditors
     
  • Question 14
   
 

Your _____ tax rate is the amount of tax payable on the next taxable dollar you earn.

      
   

Answers:

A. deductible
 

B. residual
 

C. total
 

D. average
 

 

E. Marginal
     
  • Question 15
   
 

The cash flow to creditors includes the cash:

      
   

Answers:

A. received by the firm when payments are paid to suppliers.
 

B. outflow of the firm when new debt is acquired.
 

 

C. outflow when interest is paid on outstanding debt.
 

D. inflow when accounts payable decreases.
 

E. received when long-term debt is paid off.
     

 

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