1. Agency problem is not a major concern in sole proprietorships because: a. b.

Question

1. Agency problem is not a major concern in sole proprietorships because: a. b. c. d. Expense amounts are not excessive Owners bear the full cost of their actions Owners costs are shared with other parties in the market The market does not care about the agency costs in sole proprietorship 2. Banks can potentially better match lenders and borrowers because: a. Banks are not motivated to earn profits b. Banks do not have tax liabilities c. Banks have information to evaluate creditworthines d. Banks have a lot of money 3. What is the best way to calculate the market value of shareholders' equity? a. Asset value minus liabilities value in the balance sheet b. Use income statement to see how much shareholders receive each year c. Retained earnings plus net income d. Shares outstanding multiplied by share market price If firm A has larger average days in inventory than fim B, then: a. Firm A is doing better inventory management b. Firm A has a larger receivables turnover c. Firm B has a larger cost of goods sold per unit inventory value d. Firm B has a larger average collection period 5. The APR on a loan is equal to EAR when: a. Interest is compounded monthly b. Interest is compounded quarterly c. Interest is compounded semi-annually d. Interest is compounded annually

Explanation / Answer

Question 1 OPTION B

Question 2 OPTION C

Question 3 OPTION B

Question 4 OPTION D

Question 5 OPTION D

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