Assignment - Introduction to

Financial Management
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*Kinakailangan

Which one of the following categories of owners enjoys limited

liability?
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1 punto

o General partners in a limited partnership

o Shareholders (common stock) of a corporation
o Sole proprietors
o General partners in a general partnership

The true owners of the corporation are the:

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1 punto

o common stockholders.
o holders of debt issues of the firm.
o board of directors of the firm.
o preferred stockholders.

Which of the following factors enable a public corporation to grow to a

greater extent, and perhaps at a faster rate, than a partnership or a
proprietorship?
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1 punto

o Elimination of double taxation on corporate income

o Access to the capital markets
o Limited life
o Unlimited liability of shareholders
Which of the following is false?
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1 punto

o The financing decision involves the process of allocating funds for investment in
competing assets.
o It is necessary to determine the appropriate risk-return trade-off to maximize the market
value of the firm for its shareholders.
o The treasurer would be responsible for activities such as managing cash balances,
granting credit to customers and managing the process of issuing new securities.
o The optimal capital structure is the best combination of long-term debt and equity.

Corporate governance is often narrowly defined as the prudent

exercise of ownership rights toward the goal of increased
______________.
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1 punto

o asset turnover
o profit
o sales volume
o shareholder value

What is the chief disadvantage of the sole proprietorship as a form of

business organization when compared to the corporate form?
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1 punto

o The cost of formation.

o Inadequate profit sharing.
o Owners have unlimited liability.
o Sole proprietorships are subject to double taxation of profits.

Assume that you are starting a business. Further assume that the
business is expected to grow very quickly and a great deal of capital
will be needed soon. What type of business organization would you
choose?
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1 punto
 o Sole proprietorship
o Limited partnership
o Corporation
o General Partnership

Regine is a financial manager who has discovered that her company is

violating environmental regulation. If her immediate superior is
involved, her appropriate action is to
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1 punto

o Do nothing since she has a duty of loyalty to the organization.

o Present the matter to the next higher managerial level
o Consult the audit committee
o Confront her immediate superior.

Which of the following is NOT an advantage of the sole

proprietorship?
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1 punto

o Limited liability
o No time limit imposed on its existence
o No legal requirements for starting the business
o None of the above

Integrity is an ethical requirement for all financial managers. One

aspect of integrity requires
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1 punto

o Performance of professional duties in accordance with applicable laws.

o Refraining from improper use of inside information.
o Avoidable of conflict of interest.
o Maintenance of an appropriate level of professional competence.

Which of the following is the primary objective of a firm?

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1 punto

o maximize stockholder wealth

o satisfaction of suppliers
 o prompt payment to creditors
o satisfaction of customers

Which of the following statements is true?

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1 punto

o Social responsibility and profit maximization are synonymous.

o There are some serios problems with the financial goal of maximizing earnings of the
firm.
o Maximizing the earning of the firm is the primary goals of financial management.
o The higher the profit of a firm, the higher the value of the firm is assured of receiving in
the market.

All of the following are functions of the financial manager except

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1 punto

o Allocating the funds to the most profitable asset.

o Assigning the market price of the company’s stock.
o Analyzing and planning the company’s performance.
o Anticipating the company’s financial needs.

Which of the following is NOT true for limited partnerships?

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1 punto

o Only the name of general partners can appear in the name of the firm.
o Limited partners can only manage the business.
o One general partner must exist who has unlimited liability.
o Limited partners may sell their interest in the company.

Which of the following goals of the firm is equivalent to the

maximization of shareholder wealth?
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o Maximization of the total market value of the firm's common stock

o Profit maximization
o Risk minimization
o Maximization of Cash Flow

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