Pecking Order Theory
Brigham Concise 4th Edition
Chapter 1: An Overview of Financial Management
1. Which of the following are among the three main areas of finance?
a. financial institutions
b. investments
c. financial management
d. all of the above are correct
e. none of the above are correct
d. Correct.
2. The globalization of business and the increased use of information technology are the two key trends in financial management today.
a. True
b. False
a. True
3. 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?
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. All of the above statements are correct.
c. Correct.
4. A partnership is subject to the same taxation as corporations.
a. True
b. False
b. False
5. One main disadvantage of partnerships is the requirement of a charter and set of bylaws.
a. True
b. False
b. False
6. One disadvantage of the sole proprietorship form of organization is that there is:
a. unlimited liability.
b. double taxation
c. more regulations than for corporations
d. easy transferability of ownership interest
e. all of the above are correct.
a. Correct
7. A corporate charter should include which of the following:
a. name of the proposed corporation
b. type of activities it will pursue
c. amount of capital stock
d. number of directors
e. names and addresses of directors
f. all of the above
f. Correct.
8. One reason that the value of most businesses is maximized if they are organized as a corporation is that:
a. corporations face unlimited liability.
b. it is easier to transfer ownership of a corporation (corporations are more liquid assets).
c. corporations have a more difficult time raising capital than sole proprietorships.
d. All of the
Chapter 1: An Overview of Financial Management
1. Which of the following are among the three main areas of finance?
a. financial institutions
b. investments
c. financial management
d. all of the above are correct
e. none of the above are correct
d. Correct.
2. The globalization of business and the increased use of information technology are the two key trends in financial management today.
a. True
b. False
a. True
3. 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?
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. All of the above statements are correct.
c. Correct.
4. A partnership is subject to the same taxation as corporations.
a. True
b. False
b. False
5. One main disadvantage of partnerships is the requirement of a charter and set of bylaws.
a. True
b. False
b. False
6. One disadvantage of the sole proprietorship form of organization is that there is:
a. unlimited liability.
b. double taxation
c. more regulations than for corporations
d. easy transferability of ownership interest
e. all of the above are correct.
a. Correct
7. A corporate charter should include which of the following:
a. name of the proposed corporation
b. type of activities it will pursue
c. amount of capital stock
d. number of directors
e. names and addresses of directors
f. all of the above
f. Correct.
8. One reason that the value of most businesses is maximized if they are organized as a corporation is that:
a. corporations face unlimited liability.
b. it is easier to transfer ownership of a corporation (corporations are more liquid assets).
c. corporations have a more difficult time raising capital than sole proprietorships.
d. All of the