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0-11430000Multiple-Choice Questions for use withFinancial Management: Theory and PracticeThird Canadian Edition, by Brigham/Ehrhardt/Gessaroli/NasonChapter 1: An Overview of Financial Management and the Financial Environment1.Which business organization is most appropriate for businesses with cash-producing assets and no need of large capital expenditures?a.sole proprietorshipb.limited partnershipc.corporationd.income trust2.Which business organization is most appropriate for businesses with cash-producing assets and a need of large capital expenditures?a.sole proprietorshipb.limited partnershipc.corporationd.income trust3.What is the primary financial disadvantage of forming business as a corporation?a.uneasy transfer of plicated incorporation processc.limited access to financial marketsd.earnings may be subject to double taxation4.What is the main perceived attraction of sole proprietorships?a.higher start-up costsb.unregulated business environmentc.fewer layers in the organizational structured.continuity of business5.Which of the following is least likely to be found in the articles of incorporation and bylaws?a.employees’ salary structureb.board member electionc.business life spand.corporate social responsibility6.What should a company do to maximize its fundamental value?a.lower the free cash flows of the businessb.reduce the risk level of the organizationc.slow down the cash receipts from various sourcesd.go for 100% debt financing7.What is the commonly accepted objective of management when operating a business in the real world?a.ensuring all employees are well paidb.minimizing the tax billc.maximizing shareholder wealthd.maximizing profit8.You deposit money to your CIBC savings account, and then the bank lends your money to a home buyer as a mortgage loan. Which of the following best describes such a financial transaction?a.an exchange of physical assetsb.a primary market transactionc.an indirect financed.a private placement offer9.Which of the following is most likely to result in a decrease in the interest rates in the economy?a.The Bank of Canada increases growth in the money supply.b.There is an increase in expected inflation.c.The government has budget surpluses.d.The economy is growing.10.Purchases of Treasury bills by the central bank raises security prices. How will interest rates be affected?a.They will fall.b.They will remain unchanged.c.They will rise.d.They will be inflated.11.Which of the following is NOT considered to be a financial institution?a.RBC Capital Marketsb.Bank of Montrealc.Treasury Department of Sears Canadad.Windsor Family Credit Union12.Which of the following financial instruments are traded in the money markets?a.corporate mon ernment of Canada Treasury billsd.3-year Canada Savings Bonds13.Which of the following best defines a sole proprietorship?a.a company that has one owner, is inexpensive to start, and has few regulationsb.a company that has one owner, is expensive to start, and is highly regulatedc.a company that has multiple owners, is inexpensive to start, and has few regulationsd.a company that has multiple owners, is inexpensive to start, and is highly regulated14.Which of the following best defines a partnership?a.a company that has one owner, is inexpensive to start, and has few regulationsb.a company that has one owner, is expensive to start, and is highly regulatedc.a company that has multiple owners, is inexpensive to start, and has few regulationsd.a company that has multiple owners, is inexpensive to start, and is highly regulated15.Which of the following best defines a corporation?a.a company that has a single owner that is involved in the day-to-day operations of the companyb.a company that has multiple owners that may or may not be involved in the day-to-day operations of the companyc.a company that has very few regulationsd.a company that has unlimited liability for its owners16.Which of the following best defines an income trust?a.a fund that is set up for the purchase of debt for the companyb.a fund that is set up to receive the after-tax dividends of the corporationc.a fund that is set up to receive the before-tax cash payments of the corporationd.a fund that holds assets for the corporation17.The maximization of which of the following is the primary goal of a company’s management?a.reported profitb.fundamental share pricec.market shared.personal wealth ................
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