this is multiple choice questions Midterm esamination. Answer all of the questio
ID: 2789216 • Letter: T
Question
this is multiple choice questions
Midterm esamination. Answer all of the questions below. I: Multiple Cboices. Circle the correct answers I. A company finanoes cor represent theof the company ts construction of a new factory by issuing stocks and bonds. These stocks and bonds corporate finance financial capital physical capital D, strategic planning 2. When a household chooses decides to take a loan in order to buy a car, they incur A. asset B capital liability D net worth 3. Financial instruments or claims that cannot be traded im the market are called C Esamples of these include bank loan, employee stock options and pension tiabilities. A capital structure B nonmarketable claims Cstandardized securities D. working capital 4. A firm that is owned by two or more owners, who share the equity in A. sole proprietorship business, is called a : partnership C, corporation D. multinational enterprise 3 5. Margaret is a major shareholder of JKL. Corporation. While IKL. Corporation is doing well financially Margaret would like sell off a large portion of her JKL stocks and invest in the renewsble energysector. During the same time the management strategy within JKL Corporation remains unchanged. Margaret's decision highlights A. the bankruptcy procedure undertaken by JKL Corporation B the benefit of separation of ownership and management within JKL. Corporeation B C. the long term strategic planning by the management of JKI. Corporation D, the potential takeover by competitors of JKL Corporation 6. Managers of a corporation that seek to promote the interest of shareholders should A. learn the risk preference and opinions of all of its shareholders.2 Lo 13 maximize wealth of current shareholders respect ethical norms and promote desirable social goals D, pursue their own private objectives and maximize their compensation package 7. In a market economy in which companies have dispersed ownership, the most effective mechanism to encourage managers to promote stockholder's best interest is: A. the firm's board of directorsExplanation / Answer
B
C
B
B
B
B
All the options circled in the question are correct except for 3 which should be B
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