Ch1 Assignment

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

B  The board of directors

C  The CEO of the firm

D  A company engineer

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

B  the market for corporate control.

C  the managerial labor market disciplining managers.

D  none of these

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

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

C  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.

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

A  to hedge risk.

B  to make deposits.

C  none of these

D  to take risk.

A  the auction market.

B  the bond market.

C  the money market.

D  the stock market.

A  a secondary market transaction.

B  none of these

C  a futures market transaction.

D  a primary market transaction.

A  Primary

B  Secondary

A  Primary

B  Secondary

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 total assets and total liabilities.

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

C  difference between total assets and current assets.

D  difference between current assets and current liabilities.

A  flow-through taxation.

B  easiness to start.

C  limited liability of owners.

D  tax exemption of dividends.

A  Excessive perks.

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

C  Providing lunch for the employees.

D  Investment in Land & Buildings.

A  designing an effective compensation package.

B  having managers report to the board of directors.

C  instituting severe penalties for bad decisions.

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

A  A corporation’s board of directors

B  All of these

C  A CEO

D  A chairman

A  stockholders have unreasonable expectations about managerial performance.

B  None of these

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

D  management is separate from ownership.

A  Profit maximization

B  Stockholders’ wealth maximization

C  Tax minimization

D  Revenue maximization

A  Partnership

B  Limited liability partnership

C  Corporation

D  Sole proprietorship

A  Partnership

B  Sole proprietorship

C  Private corporation

D  Public corporation

A  Partnership

B  Corporation

C  Both Sole proprietorship and Partnership

D  Sole proprietorship

A  Expects to receive interest.

B  Expects to receive dividends.

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

D  Expects to receive a capital gain on their investment.