Fi515 Week 1 Quiz

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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

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:0 of 6

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 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.

Instructor Explanation:Sole proprietorships pay personal income tax, not corporate tax. The other statements are false. Corporations are subject to limited liability, but are subject to more regulations than the other forms of business organizations.

Points Received:0 of 6

4.Question :While other things are held constant, which of the following actions would increase the amount of cash on a company's balance sheet?

Student Answer: The company repurchases common stock.

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