Which one of the following statements correctly applies to a sole proprietorship?
a) The owner enjoys limited liability for the firm's debts.
b) Obtaining additional equity is dependent on the owner's personal finances.
c) The ownership can easily be transferred to another individual.
d) Debt financing is easy to arrange in the firm's name.
e) The business entity has an unlimited life.
Valerie bought 200 shares of Able stock today. Able stock has been trading for some time on the NYSE. Valerie's purchase occurred in which market?
a) Dealer market
b) Over-the-counter market
c) Secondary market
d) Primary market
e) Tertiary market
If you accept a job as a domestic security analyst for a brokerage firm, you are most likely working in which one of the following financial areas?
b) International finance
c) Corporate finance
d) Capital management
e) Private placements
Marti had an unexpected surprise when she ate her Lotsa Good cereal this morning. She found a piece of metal mixed in her cereal. The potential claim which Marti has against this firm is that of a(n):
c) Debt holder.
e) General creditor.
Stadford, Inc. is financed with 40 percent debt and 60 percent equity. This mixture of debt and equity is referred to as the firm's:
a) Asset allocation.
b) Working capital.
c) Capital budget.
d) Risk structure.
e) Capital structure.
Which one of the following statements is correct?
a) All secondary markets are broker markets.
b) All stock transactions are secondary market transactions.
c) All secondary markets are dealer markets.
d) All stock trades between existing shareholders are secondary market transactions.
e) All Dutch auction sales are secondary market transactions.
What is the goal of financial management for a sole proprietorship?
a) Maximize net income given the current resources of the firm
b) Maximize the market value of the equity
c) Decrease long-term debt to reduce the risk to the owner
d) Minimize the reliance on fixed costs
e) Minimize the tax impact on the proprietor
Which one of the following is an advantage of being a limited partner?
a) Non-taxable share of any profits
b) Control over the daily operations of the firm
c) Active market for ownership interest
d) Unlimited profits without risk of incurring a loss
e) Losses limited to capital invested
An auction market:
a) Is also referred to as an OTC market.
b) Is an electronic means of exchanging securities.
c) Is dealer based?
d) Handles primary market transactions exclusively.
e) Has a physical trading floor.
The daily financial operations of a firm are primarily controlled by managing the:
a) Capital budget.
b) Total debt level.
c) Working capital.
d) Capital structure.
e) Long-term liabilities.
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