A+ Answers of the following Questions

1. Which one of the following parties has ultimate control of a corporation?
chairman of the Board 
board of directors 
chief executive officer 
chief operating office 
shareholders 

2. Public offerings of debt and equity must be registered with which one of the following?
New York Board of Governors 
Federal Reserve 
NYSE Registration Office 
Securities and Exchange Commission 
Market Dealers Exchange 

3. Which one of the following is a primary market transaction?
sale of currently outstanding stock by a dealer to an individual investor 
sale of a new share of stock to an individual investor 
stock ownership transfer from one shareholder to another shareholder 
gift of stock from one shareholder to another shareholder 
gift of stock by a shareholder to a family member

1. Under flexible exchange rates: 
a monetary policy is ineffective while fiscal policy is very effective 
b monetary and fiscal policy are both very effective
c monetary policy is effective and fiscal policy ineffective 
d monetary and fiscal policy always have to be coordinated 

2. People will hold less money if they expect: 
a bond prices to rise 
b interest rates on bonds to fall 
c interest rates on bonds to rise
d to get paid more frequently

3. In a normal AD-AS diagram with an upward-sloping AS curve, if a tax decrease is combined with money expansion: 
a AD will remain relatively unaffected but the interest rate will decrease 
b AD will remain relatively unaffected but the interest rate will increase 

c prices will increase but we cannot say what will happen to output or the interest rate 
d AD, the price level, and output will all increase

1. Which one of the following best states the primary goal of financial management?
maximize current dividends per share 
maximize the current value per share 
increase cash flow and avoid financial distress 
minimize operational costs while maximizing firm efficiency 
maintain steady growth while increasing current profits 

2. Why should financial managers strive to maximize the current value per share of the existing stock?
doing so guarantees the company will grow in size at the maximum possible rate 
doing so increases employee salaries 
because they have been hired to represent the interests of the current shareholders 
because this will increase the current dividends per share 
because managers often receive shares of stock as part of their compensation 

3. Which one of the following actions by a financial manager is most apt to create an agency problem?
refusing to borrow money when doing so will create losses for the firm 
refusing to lower selling prices if doing so will reduce the net profits 
refusing to expand the company if doing so will lower the value of the equity 
agreeing to pay bonuses based on the market value of the company stock rather than on the firm's level of sales 
increasing current profits when doing so lowers the value of the firm's equity 

1. Ann gives Bill the distinct impression that Carol is Ann's agent, when in fact she is not. Bill deals with Carol as Ann's agent. Regarding any agency relationship, Ann
A. Can deny it
B. Can deny it to the extent of any injury suffered by Bill
C. Can deny it to the extent of any liability that might be imposed on Ann
D. Cannot deny it.

2. Which one of the following terms is defined as the mixture of a firm's debt and equity financing?
A. working capital management 
B. cash management 
C. cost analysis 
D. capital budgeting 
E. capital structure 

3. The decision to issue additional shares of stock is an example of which one of the following?
A. working capital management 
B. net working capital decision 
C. capital budgeting 
D. controller's duties 
E. capital structure decision