answer key
10/1/2012
CORPORATE FINANCE
FIN 3313.01 Fall 2012
1st MID-TERM
SINAN YILDIRIM
NAME
(Each Multiple choice question is worth 4 points)
1. The goal of financial management is to increase the:
a. future value of the firm 's total equity.
b. book value of equity.
c. dividends paid per share.
d. current market value per share.
e. number of shares outstanding, thereby increasing the market value of equity.
2. A corporation:
A. is ultimately controlled by its board of directors.
B. is a legal entity separate from its owners.
C. is prohibited from entering into contractual agreements.
D. has its identity defined by its bylaws.
E. has its existence regulated by the rules set forth in its charter.
3. Which of the following are advantages of the corporate form of organization?
I. ability to raise large sums of capital
II. ease of ownership transfer
III. corporate taxation
IV. unlimited firm life
a.I and II only
b. III and IV only
c. II, III, and IV only
d. I, II, and IV only
e. I, II, III, and IV
4. Which one of the following best describes the primary intent of the Sarbanes-Oxley Act of 2002?
A. Increase the costs of going public
B. Increase protection against corporate fraud
C. Limit secondary issues of corporate securities
D. Decrease the number of publicly traded firms
E. Increase the number of firms that "go dark"
5. Which of the following are included in the market value of a firm but not in the book value?
I. technical knowledge of the employees
II. quality of the management team
III. experience of the employees
IV. reputation of the firm
a. IV only
b. I and III only
c. II and IV only
d. I, II, and III only
e. I, II, III, and IV
6. Which one of the following is most apt to align management 's priorities with shareholders ' interests?
A. Increasing employee retirement benefits
B. Compensating managers with shares of stock that must be held for 3 years before the shares can be
CORPORATE FINANCE
FIN 3313.01 Fall 2012
1st MID-TERM
SINAN YILDIRIM
NAME
(Each Multiple choice question is worth 4 points)
1. The goal of financial management is to increase the:
a. future value of the firm 's total equity.
b. book value of equity.
c. dividends paid per share.
d. current market value per share.
e. number of shares outstanding, thereby increasing the market value of equity.
2. A corporation:
A. is ultimately controlled by its board of directors.
B. is a legal entity separate from its owners.
C. is prohibited from entering into contractual agreements.
D. has its identity defined by its bylaws.
E. has its existence regulated by the rules set forth in its charter.
3. Which of the following are advantages of the corporate form of organization?
I. ability to raise large sums of capital
II. ease of ownership transfer
III. corporate taxation
IV. unlimited firm life
a.I and II only
b. III and IV only
c. II, III, and IV only
d. I, II, and IV only
e. I, II, III, and IV
4. Which one of the following best describes the primary intent of the Sarbanes-Oxley Act of 2002?
A. Increase the costs of going public
B. Increase protection against corporate fraud
C. Limit secondary issues of corporate securities
D. Decrease the number of publicly traded firms
E. Increase the number of firms that "go dark"
5. Which of the following are included in the market value of a firm but not in the book value?
I. technical knowledge of the employees
II. quality of the management team
III. experience of the employees
IV. reputation of the firm
a. IV only
b. I and III only
c. II and IV only
d. I, II, and III only
e. I, II, III, and IV
6. Which one of the following is most apt to align management 's priorities with shareholders ' interests?
A. Increasing employee retirement benefits
B. Compensating managers with shares of stock that must be held for 3 years before the shares can be