Week 1 Quiz

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1. Money markets are markets for ______. (Points : 6) |
foreign stocks
consumer automobile loans
U.S. stocks
short-term debt securities
long-term bonds
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2. Which of the following could explain why a business might choose to organize as a corporation rather than as a sole proprietorship or a partnership? (Points : 6) | A. Corporations generally face fewer regulations.

B. Corporations generally face lower taxes.
C. Corporations generally find it easier to raise capital.
D. Corporations enjoy unlimited liability.
E. Statements C and D are correct.
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3. Which of the following statements is true? (Points : 6) | One of the benefits of incorporating your business is that you become entitiled to receive unlimited liability. Sole proprietorships are subject to more regulations than corporations. Sole proprietorships do not have to pay corporate tax.

All of the above answers are correct.
None of the above answers are correct.
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4. While other things are held constant, which of the following actions would increase the amount of cash on a company's balance sheet? (Points : 6) | The company repurchases common stock.
The company pays a dividend.
The company issues new common stock.
The company purchases a new piece of equipment.
The company gives customers more time to pay their bills.
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5. Kramer Corporation recently announced that its net income was lower than last year. However, analysts estimate that the company's net cash flow increased. What factors could explain this discrepancy? (Points : 6) | A. The company's depreciation expense increased.

B. The company's interest expense declined.
C. The company had an increase in its noncash revenues.
D. Answers A and B are correct.
E. Answers B and C are correct.
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6. Which of the following statements is most correct? (Points : 6) | A. Actions that increase net income will always increase net cash flow. B. One way to increase EVA is to maintain the same operating income with less capital. C. One drawback of EVA as a performance measure is that it mistakenly assumes that equity capital is free. D. Answers A and B are correct.

E. Answers A and C are correct.
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Grading Summary
These are the automatically computed results of your exam. Grades for essay questions, and comments from your instructor, are in the "Details" section below. | Date Taken: | 9/9/2012| Time Spent:| 45 min , 36 secs |

Points Received:| 36 / 36 (100%) |
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Question Type:| # Of Questions:| # Correct:|
Multiple Choice| 6| 6|
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Grade Details - All Questions |

1.| Question :| Money markets are markets for ______.|
|
| Student Answer:| | foreign stocks |
| | | consumer automobile loans |
| | | U.S. stocks |
| | | short-term debt securities |
| | | long-term bonds |
|
|
| Points Received:| 6 of 6 |
| Comments:| |
|
|
2.| Question :| Which of the following could explain why a business might choose to organize as a corporation rather than as a sole proprietorship or a partnership?|
|
| Student Answer:| | A. Corporations generally face fewer regulations. | | | | B. Corporations generally face lower taxes. |
| | | C. Corporations generally find it easier to raise capital. | | | | D. Corporations enjoy unlimited liability. |
| | | E. Statements C and D are correct. |
| Instructor Explanation:| The advantages of incorporation include unlimited life, easy transferability of ownership interest, limited liability, and ease of raising money in the capital markets. Regulations and double taxation are disadvantages of corporations.| |

|
| Points Received:| 6 of 6 |
| Comments:| |
|
|
3.| Question :| Which of the following statements is true?|
|
| Student Answer:| | One of the benefits of incorporating your business is that you become entitiled to receive unlimited liability. | | | | Sole proprietorships...
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