Bus Finance

Question 1

This is the set of laws, policies, incentives, and monitors designed to handle the issues arising from the separation of ownership and control.

Answer 1

corporate governance

Question 2

This subarea of finance looks at firm decisions in acquiring and utilizing cash received from investors or from retained earnings.

Answer 2

financial management

Question 3

The portion of a company’s profits that are kept by the company rather than distributed to the stockholders as cash dividends is referred to as

Answer 3

retained earnings.

Question 4

Nonwage compensation that might actually enhance owner value, in that such items may boost managers’ productivity.

Answer 4

perks or perquisites

Question 5

Outside parties that monitor the firm include all of the following EXCEPT

Answer 5

the New York Stock Exchange.

Question 6

Which of these does NOT act as a monitor of how the firm is being run outside the firm?

Answer 6

members of the board of directors

Question 7

An employee stock option plan is

Answer 7

a way to align the interests of employees with those of the owners.

Question 8

The board of directors

Answer 8

are elected by shareholders.

Question 9

An angel investor differs from a venture capitalist because of the

Answer 9

size of investment.

Question 10

All of the following are advantages to organizing as a corporation EXCEPT

Answer 10

double taxation.

Question 11

Which of the following is the firm’s highest-level financial manager?

Answer 11

chief financial officer

Question 12

Individuals who provide small amounts of capital and expert business advice to small firms in exchange for an ownership stake in the firm are referred to as

Answer 12

angel investors.

Question 13

Which of the following is considered a hybrid organization?

Answer 13

S corporation
limited liability company
limited liability partnership
limited partnership
all of these choices are correct.

Question 14

In order for an angel investor or venture capitalist to exchange capital for ownership in a business that is a sole proprietorship, which of these must happen?

Answer 14

Both the business must be re formed as a partnership and the owner must give up some control.

Question 15

These individuals examine a firm’s financial strength for its debt holders.

Answer 15

credit analysts

Question 16

From a taxation perspective, the form of business organization with the highest business level taxes is the

Answer 16

corporation.

Question 17

This is a general term for securities like stocks, bonds, and other assets that represent ownership in a cash flow.

Answer 17

financial asset

Question 18

Restricted stock is

Answer 18

a special type of stock that is not transferable from the current holder to others until specific conditions are satisfied.

Question 19

All of the following are an example of a fiduciary relationship EXCEPT

Answer 19

the shareholder elects a board member.

Question 20

Which of the following can create ethical dilemmas between corporate managers and stockholders?

Answer 20

agency relationship

Question 21

This subarea of finance is important for adapting to the global economy.

Answer 21

international finance

Question 22

These individuals follow a firm, conduct their own evaluations of the company’s business activities, and report to the investment community.

Answer 22

investment analysts

Question 23

Not all cash a company generates will be returned to the investors. Which of the following will NOT reduce the amount of capital returned to the investors?

Answer 23

dividends

Question 24

Which of the following is NOT a function of the board of directors?

Answer 24

provide reports to the auditors

Question 25

Which of the following is not an impact of the slowdown occurring in China’s economy?

Answer 25

money going out of Manhattan, New York