Ch1 Assignment

A  A stockholder holding 10% or more of any class of voting stock

B  A company engineer

C  The CEO of the firm

D  The board of directors

A  the market for corporate control.

B  none of these

C  the board of directors affecting the prospects of a manager.

D  the managerial labor market disciplining managers.

A  Capital market instruments include both long-term debt and common stocks.

B  Money market instruments are illiquid and have high default risk.

C  An example of a primary market transaction would be inheriting 1000 shares of GE from your grandfather.

D  If your uncle in New York sold 100 shares of Apple through his broker to an investor in New York, this would be a primary market transaction.

A  none of these

B  to take risk.

C  to hedge risk.

D  to make deposits.

A  the bond market.

B  the stock market.

C  the auction market.

D  the money market.

A  a secondary market transaction.

B  a primary market transaction.

C  a futures market transaction.

D  none of these

A  Secondary

B  Primary

A  Secondary

B  Primary

A  Secondary

B  Primary

A  Both Sole proprietorship and General partnership

B  Sole proprietorship

C  General partnership

D  Corporation

A  False

B  True

A  difference between shareholders’ equity and long-term debt.

B  difference between total assets and total liabilities.

C  difference between current assets and current liabilities.

D  difference between total assets and current assets.

A  easiness to start.

B  tax exemption of dividends.

C  flow-through taxation.

D  limited liability of owners.

A  Investment in Land & Buildings.

B  Hiring external auditors to certify accounting statements despite having internal auditors.

C  Excessive perks.

D  Providing lunch for the employees.

A  instituting severe penalties for bad decisions.

B  designing an effective compensation package.

C  hiring outside monitors to keep track of the managers’ decisions.

D  having managers report to the board of directors.

A  A CEO

B  All of these

C  A chairman

D  A corporation’s board of directors

A  managers know how to manage the firm better than stockholders.

B  management is separate from ownership.

C  stockholders have unreasonable expectations about managerial performance.

D  None of these

A  Stockholders’ wealth maximization

B  Revenue maximization

C  Profit maximization

D  Tax minimization

A  Limited liability partnership

B  Sole proprietorship

C  Corporation

D  Partnership

A  Partnership

B  Private corporation

C  Sole proprietorship

D  Public corporation

A  Partnership

B  Both Sole proprietorship and Partnership

C  Corporation

D  Sole proprietorship

A  Expects to receive a capital gain on their investment.

B  Expects to have rights as defined in the corporation’s charter and bylaws.

C  Expects to receive dividends.

D  Expects to receive interest.