Ch1 Assignment

A  The CEO of the firm

B  The board of directors

C  A company engineer

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

A  the managerial labor market disciplining managers.

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

C  the market for corporate control.

D  none of these

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

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

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 take risk.

B  to make deposits.

C  to hedge risk.

D  none of these

A  the bond market.

B  the stock market.

C  the auction market.

D  the money market.

A  a primary market transaction.

B  a futures market transaction.

C  a secondary market transaction.

D  none of these

A  Primary

B  Secondary

A  Primary

B  Secondary

A  Primary

B  Secondary

A  Corporation

B  Sole proprietorship

C  Both Sole proprietorship and General partnership

D  General partnership

A  True

B  False

A  difference between current assets and current liabilities.

B  difference between total assets and current assets.

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

D  difference between total assets and total liabilities.

A  easiness to start.

B  limited liability of owners.

C  tax exemption of dividends.

D  flow-through taxation.

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

B  Providing lunch for the employees.

C  Investment in Land & Buildings.

D  Excessive perks.

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

B  having managers report to the board of directors.

C  designing an effective compensation package.

D  instituting severe penalties for bad decisions.

A  A corporation’s board of directors

B  All of these

C  A chairman

D  A CEO

A  management is separate from ownership.

B  None of these

C  stockholders have unreasonable expectations about managerial performance.

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

A  Revenue maximization

B  Stockholders’ wealth maximization

C  Tax minimization

D  Profit maximization

A  Sole proprietorship

B  Partnership

C  Corporation

D  Limited liability partnership

A  Sole proprietorship

B  Public corporation

C  Private corporation

D  Partnership

A  Sole proprietorship

B  Partnership

C  Both Sole proprietorship and Partnership

D  Corporation

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 interest.

D  Expects to receive dividends.