Multiple choice

1. Which of the following goals of the firm is equivalent to the maximization of shareholder wealth?
a.     Profit maximization
b.     Risk minimization
c.     Maximization of the total market value of the firm’s common stock
d.     None of the above

2. In finance, we assume that investors are generally:                             
a.     neutral to risk.
b.     averse to risk.
c.     fond of risk.
d.     none of the above.

3. Which of the following is not an advantage of the sole proprietorship?                    
a.     Limited liability
b.     No time limit imposed on its existence
c.     No legal requirements for starting the business
d.     None of the above

4. The true owners of the corporation are the:                                  
a.     holders of debt issues of the firm.
b.     preferred stockholders.
c.     board of directors of the firm.
d.     common stockholders.