财务管理EXERCISE 1

(Introduction to Finance)

Multiple Choice Questions

1． The primary goal of the corporation is maximization of __________.

A) profits

B) sales growth C) goodwill

D) shareholder wealth

2． Generally, a corporation is owned by its:

A) Managers

B) Board of Directors C) Shareholders D) All of the above

3． The following are examples of real assets except:

A) Machinery B) Common stock C) Office buildings D) Patents

4． The following are advantages of separation of ownership and management of corporations except:

A) Corporations can exist forever

B) Facilitate transfer of ownership without affecting the operations of the firm C) Hire professional managers D) Incur agency costs

5． Agency costs are costs incurred when:

A) Managers do not attempt to maximize firm value

B) Shareholders incur costs to monitor the managers and influence their actions C) Both A and B D) None of the above

6． What function raises cash and invests in projects?

A) Firm’s operations B) Financial manager C) Financial markets D) Shareholders

7． Limited liability is an important feature of:

A) Sole proprietorships B) Board of Directors C) Corporations D) All of the above

8． A business owned by a single person is a __________.

A) sole proprietorship B) partnership C) small company

D) independent contractor