BUSN 5200 Week 1 to 8 Quizzes Solution

BUSN 5200 Week 1 to 8 Quizzes Solution

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BUSN 5200 Quiz for week 1

Note:  In the questions below, the correct answer is identified with an asterisk

1.  In a corporation, the Chief Financial Officer (CFO) usually reports to the:

a.  Treasurer

b.  Controller

c.  Chief Operating Officer (COO) 

d.  VP of Financial Planning

2.  The primary factor that separates the corporate form of business from partnerships and sole proprietorships is:

a.  Corporations are larger than partnerships and sole proprietorships

b.  The owners of corporations get to keep all the company’s profits

c.  The owners of corporations run the business and have unlimited liability

d.  Corporations are “legal persons” separate and distinct from their owners

3.  The primary goal of a publicly-owned firm interested in serving its stockholders should be to

 a. Maximize expected total corporate profit.

 b. Maximize expected EPS.

 c. Minimize the chances of losses.

 d. Maximize the stock price per share.

 e. Maximize expected net income.

4.  By maximizing the earnings of the firm we will ensure that the price per share of common stock is maximized, hence shareholders' wealth will also be maximized.

 a. True

 b. False 

5.  Which of the following is the best measure of the wealth of a firm's stockholders?

 a. The firm's Net Income during the past year

 b. Expected Earnings per Share during the coming year

 c. Book Value (or Net Worth) as recorded on the balance sheet

 d. The price of the firm's stock on the open market 

6.  Consider the following firms:

                          Net Income      Stock Price at   Stock Price at

                            this year          Beg of Year       End of Year 

Firm A:           $10,000,000             $20                      $10

Firm B:          $(10,000,000)            $10                      $20

a. The manager of Firm A is doing a better job than B

b. The manager of Firm B is doing a better job than A 

c. Neither manager is doing a good job

d. Both managers are doing a good job

7.  The practice of locating a U.S. Firm’s corporate headquarters in Bermuda because Bermuda does not have a corporate income tax is:

a.  Illegal

b.  Irresponsible

c.  Definitely unethical

d.  Legal, but might be considered unethical by some

8.  In corporations, the goals of management and the goals of the stockholders are

a.  Always the same

b.  Always different

c.  Might be different

d.  Must be different