QUESTION CORPORATE FINANCE CHAPTER 1

[MEMBER OF GROUP 2]
- 04 Thái Hương Giang 22CLC2_LT2
- 26 Nguyễn Phương Anh 22CLC2_LT1
- 07 Nguyễn Quang Hưng 22CLC2_LT2
- 15 Vũ Thị Như Quỳnh 22CLC2_LT2
- 22 Bùi Thị Quỳnh 22CLC2_LT1

1. Which one of the following statements concerning a sole proprietorship is

correct?
A. The ability to raise capital is limited by the owner's personal wealth.
B. The proprietorship pays taxes at the corporate tax rate.
C. The ownership of the firm is easy to transfer to another individual.
D. The company must pay income taxes separate from the taxes paid by the
owner.
E. The legal costs to form a sole proprietorship are quite substantial.
2. Which one of these accounts is included in net working capital?
A. Copyright
B. Manufacturing equipment
C. Common stock
D. Long-term debt
E. Inventory
3. Which one of the following business types is best suited to raising large
amounts of capital? Select one:
A. Sole proprietorship
B. General partnership
C. Corporation
D. Limited partnership
E. Limited liability company
4. What is one of the advantages of Sole proprietorship?
A. Easy to obtain large sums of capital to facilitate growth and expansion
B. Make it easily and inexpensively form and easy to manage
C. Easy to transfer to another
 D. All are correct
5. What are disadvantages of Corporation?
A. Double tax
B. Costly to set up and exist
C. Difficult to raise fund
D. A and B are correct
6. Which of the following best describe the role of financial markets?
I. Financial markets make economic transactions much more convenient by
creating a payment mechanism for market players.
II. Financial markets provide information with high quality of timing and
accuracy at reasonable cost.
III. Financial markets help business in securing short-term loans to meet theri
working capital requirements through the system of financial bills,
commercial paper, etc.
A. I only
B. I and II only
C. I and III only
D. II and III only
7. Which of the following is a primary market transaction?
I. ABC Company selling shares of stock to an individual investor.
II. Mr John buy 400 shares of ABC.Ltd stock from your younger brother.
You just give him cash and be gives you the stock 1/5 the trade is not
made through a broker.
III. M&A.Ltd issues 5,000,000 shares of new stock and sells them to the
public through an investment banker.
IV. Mr John buys newly-issued shares of stock from D&C.Ltd corporation.
V. Gift of stock by a shareholder to a family member.

A. II, IV only
B. III, IV and V only
C. III, IV only
D. I, IV and V only
8. Which two statements of the following is incorrect?
A. The over-the-counter market (OTC) has no permanent platform for
trading securities but it operates based on a scheme of competitive bidding and
negotiation through the Internet and other electronic systems.
 B. With sole proprietorship, there is a clear distinction between business and
personal assets.
C. Financial markets allow individuals and firms to diversify their risk.
D. In a corporation, shareholders are the owners of the company and manage
it.
9. Corporate wealth maximization is the value maximization for?
A. Equity shareholders
B. Shareholders
C. Employees
D. Debt capital owners
10.What is the disadvantage of sole proprietorship?
A. Unlimited personal liability for the business’s debts
B. Difficult to transfer to another
C. It has limited life
D. All are correct
11.What is the advantage of partnership?
A. Taxed once as sale tax
B. Has long life
C. Easy to establish
D. Easy to raise capital compared with corporation
12.What is the reason for maximizing profit not being the goal of the financial
manager?
A. The timing of returns
B. Cash flows available to stockholders
C. Risk
D. All are correct
13.Financial managers should primarily strive to: Select one:
A. Maximize the current profits of the firm.
B. Maximize the current value per share of existing stock.
C. Maximize current market share in every market in which the firm
participates.
D. Minimize costs while increasing current dividends.
E. Maximize current dividends even if doing so adds financial distress costs
to the firm.
14.A business formed by two or more individuals who each have unlimited
personal liability for all of the firm's debts is called a: Select one:
A. Limited partnership.
B. Sole proprietorship.
C. Corporation.
 D. Limited liability company.
E. General partnership.
15.A firm's capital structure refers to the firm's: Select one
A. Investment selections for its excess cash reserves.
B. Combination of cash and cash equivalents.
C. Proportions of financing from current and long-term debt and equity.
D. Mixture of various types of production equipment.
E. Combination of accounts appearing on the left side of its balance sheet