Ch1 Assignment

A  The CEO of the firm

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

C  The board of directors

D  A company engineer

A  the managerial labor market disciplining managers.

B  none of these

C  the market for corporate control.

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

A  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.

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

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

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

A  to make deposits.

B  to hedge risk.

C  none of these

D  to take risk.

A  the money market.

B  the bond market.

C  the auction market.

D  the stock market.

A  a futures market transaction.

B  a secondary market transaction.

C  none of these

D  a primary market transaction.

A  Secondary

B  Primary

A  Primary

B  Secondary

A  Secondary

B  Primary

A  General partnership

B  Both Sole proprietorship and General partnership

C  Corporation

D  Sole proprietorship

A  True

B  False

A  difference between total assets and current assets.

B  difference between total assets and total liabilities.

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

D  difference between current assets and current liabilities.

A  limited liability of owners.

B  easiness to start.

C  flow-through taxation.

D  tax exemption of dividends.

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  having managers report to the board of directors.

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

D  designing an effective compensation package.

A  A chairman

B  A CEO

C  All of these

D  A corporation’s board of directors

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

B  stockholders have unreasonable expectations about managerial performance.

C  None of these

D  management is separate from ownership.

A  Revenue maximization

B  Tax minimization

C  Stockholders’ wealth maximization

D  Profit maximization

A  Sole proprietorship

B  Limited liability partnership

C  Partnership

D  Corporation

A  Partnership

B  Private corporation

C  Public corporation

D  Sole proprietorship

A  Sole proprietorship

B  Corporation

C  Both Sole proprietorship and Partnership

D  Partnership

A  Expects to receive interest.

B  Expects to receive a capital gain on their investment.

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

D  Expects to receive dividends.