1. 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?                    

a.     Unlimited liability of shareholders

b.     Access to the capital markets

c.     Limited life

d.     Elimination of double taxation on corporate income

e.     All of the above

 

2. Which of the following should be considered when assessing the financial impact of business decisions? 

a.     The amount of projected earnings

b.     The risk-return tradeoff

c.     The timing of projected earnings; i.e., when they are expected to occur

d.     The amount of the investment in a given project

e.     All of the above

 

3. Financial management is concerned with which of the following?               

a.     Creating economic wealth

b.     Making investment decisions that optimize economic value

c.     Making business decisions that optimize economic wealth

d.     Raising capital that is needed for growth

e.     All of the above

 

4. If one security has a greater risk than another security, how will investors respond?          

a.     They will require a lower rate of return for the investment that has greater risk.

b.     They would be indifferent regarding their expectation of rates of return for either investment.

c.     They will require a higher rate of return for the investment that has greater risk.

d.     None of the above.

 

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