Finance 307

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1. The liability of sole proprietors is limited to the amount of their investment in the company.  FALSE
 4. A major disadvantage of partnerships is that they have "double taxation" of profits.  FALSE
6. Capital budgeting decisions are used to determine how to raise the cash necessary for investments.  FALSE
37. A board of directors is elected as a representative of the corporation's:  A. top management.
B. stakeholders.
C. shareholders.
D. customers.
22. Shareholders welcome higher short-term profits even when they damage long-term profits.  FALSE
38. The legal "life" of a corporation is: 
A. coincident with that of its CEO.
B. equal to the life of the Board of Directors.
C. permanent, as long as shareholders don't change.
D. permanent, regardless of current ownership.
26. The stockholders in a sole proprietorship are represented by:  A. the owner of the firm.
B. the general partner of the firm.
C. the Board of Directors of the firm.
D. no one; sole proprietorships have no stockholders.
96. Which of the following are real assets?
I. A patent.
II. A share of stock issued by Bank of New York.
III. A blast furnace in a steel-making factory.
IV. A mortgage loan taken out to help pay for a new home.
V. After a successful advertising campaign, potential customers' belief that FedEx will deliver packages promptly and reliably. VI. An IOU ("I owe you") from your brother-in-law. 
A. I only
B. III only
C. I and III only
D. I, III & V

Chapter 2:
31. Corporate financing comes ultimately from: 
A. savings by households and foreign investors.
B. cash generated from the firm's operations.
C. the financial markets and intermediaries.
D. the issue of shares in the firm.
35. When corporations need to raise funds through stock issues, they rely upon the:  A. primary market.
B. secondary market.
C. over-the-counter market.
D. centralized NASDAQ exchange.
46. Short-term financing decisions commonly occur in the:  A. primary markets.
B. secondary markets.
C. capital markets.
D. money markets.
48. You can buy silver in the: 
A. capital markets.
B. foreign-exchange markets.
C. commodities markets.
D. option markets.
50. A financial intermediary provides financing for: 
A. individuals.
B. companies.
C. other organizations.
D. All of these.
52. Compared to buying stocks and bonds directly, what are the advantages of investing in a mutual fund?  A. Efficient diversification and professional management.
B. Investment returns are not taxed until withdrawn from the fund. C. You can buy additional shares in the fund or cash out at any time. D. All of these.
72. Liquidity is important to a mutual fund because: 
A. a fund that is more liquid will attract more investors.
B. the fund's shareholders may want to redeem their shares at any time. C. the fund's managers need liquidity to trade actively.
D. the fund needs to distribute payouts to its shareholders and managers periodically. Chapter 5
Problem 16

Quiz 5-2 Future Values (LO1) |
Compute the future value of a $100 cash flow for the following combinations of discount rates and times. (Round your answers to 2 decimal places. Omit the "$" sign in your response.) | a. r = 8%, t = 10 years. FV = $ b. r = 8%, t = 20 years. FV = $ c. r = 4%, t = 10 years. FV = $ d. r = 4%, t = 20 years. FV = $ | Problem 17

Quiz 5-5 Present Values (LO2) |
You will require $700 in 5 years. If you earn 5% interest on your funds, how much will you need to invest today in order to reach your savings goal? (Round your answer to 2 decimal places.) |   |

PV   $ |
Problem 18
Quiz 5-6 Calculating Interest Rate (LO4) |
Find the interest rate implied by the following combinations of present and future values: |

Present Value | Years | Future Value |
$400 | 11 | $684 |
183 | 4 | 249 |
300 | 7 | 300 |

(Leave no cells blank - be certain to enter "0" wherever required. Input your...
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