Navigation » List of Schools » California State University, Northridge » Finance » Finance 303 – Financial Management » Spring 2024 » Quiz 1
Below are the questions for the exam with the choices of answers:
Question #1
A a hybrid between a partnership and a corporation
B a legal entity created by a state, separate and distinct from its owners and managers
C often established easily and inexpensively
D an unincorporated business owned by one individual
E a legal arrangement between two or more people who decide to do business together
Question #2
A None of these answers is correct.
B Accounting
C Management
D Marketing
E Human Resources
Question #3
A Basing managers’ compensation on intrinsic value, not market price, will lead to constant increases in stock price.
B High salaries motivate managers to increase stockholders’ wealth.
C Awarding managers stock options on a monthly basis instead of yearly keeps stock prices high.
D Rewarding managers for stock performance over the long run gives them an incentive to keep the stock price high over time.
E Yearly changes in compensation policies keep managers alert to differences in stock prices.
Question #4
A disobey and include the test results anyhow.
B There is no clear answer but staying quiet may be the worst choice.
C not say anything because she’s not in charge of development.
D anonymously tip off the local news team.
E obey the order but talk to other members of her team about the issue.
Question #5
A based on how they affect the stock price.
B in terms of financial consequences and how they affect society at large.
C consistent with management goals.
D to prioritize the broader needs of society .
E for transparency and corporate governance.
Question #6
A All of these answer choices are correct.
B covenants are included in the bond agreements.
C the amount of common stock in a firm exceeds the amount of bonds.
D they believe that a company will pursue risky projects.
E there are more than two bondholders.
Question #7
A causes the stock price to remain close to the intrinsic value over time.
B avoids shareholder activism.
C makes it less likely that corporate raiders will undervalue a firm’s stock.
D allows managers to persuade stockholders that the firm is socially responsible.
E ensures that underperforming firms will be able to change course and recover.
Question #8
A Stockholders get paid first.
B Additional debt gives stockholders an advantage in the market.
C Stockholders do better when the company does better because the stock price is higher.
D When the market is bad, stockholders don’t lose as much.
E Stockholders protect themselves with covenants.
Question #9
A S corporations
B Partnerships
C Proprietorships
D LLCs and LLPs
E C corporations
Question #10
A employees decide how individual retirement funds are invested and how much risk they are willing to assume.
B employers make investment decisions in “defined contribution” pension plans.
C all jobs require some level of financial knowledge .
D most employees are not willing to take financial risks.
E decision-making skills improve over time .
Question #11
A the intrinsic value of the stock exceeds the market price.
B the firm’s intrinsic value is maximized.
C the actual stock price exceeds the intrinsic value of the stock.
D investors are pessimistic about a stock.
E there is an R&D breakthrough.
Question #12
A Holding managers accountable for poor performance
B Rules and practices to ensure that managers balance the needs of customers, employees, and affected citizens with shareholder interests
C Focus on short-run profits that add up in the long run
D Use of stock-based compensation for key employees
E Having a strong, independent board of directors
Question #13
A All of these answer choices are correct.
B undergo an annual audit to review practices regarding social responsibility, corporate governance, and transparency.
C are committed to putting other stakeholders on an equal footing with shareholders.
D are a fairly small but rapidly growing number of companies.
E still focus on making a profit.
Question #14
A The COO is in charge of accounting and finance in most businesses.
B Finance, economics, and accounting are not related.
C Accounting developed from finance and economics.
D Economics developed from accounting and finance.
E Finance developed from economics and accounting.
Question #15
A ensure that the company’s reputation is not damaged.
B investigate the situation.
C avoid damage to the company’s culture and long-term performance.
D All of these answer choices are correct.
E take proactive steps to ensure the situation is dealt with.
Question #16
A Capital markets
B Accounting
C Financial management
D All of these are considered areas of a finance discipline
E Investments