Exam 1: Corporate Finance and the Financial Manager

A) €40,840
B) €40,740
C) €41,000
D) €42,560

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A) by increasing the debt burden carried by the company
B) by raising the company's equity by encouraging new owners to take a stake in the company
C) by decreasing the ratio of equity to debt held by the company
D) by increasing the value of shares held by the existing owners of the company

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The seller gets the ...

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False

A) Deutsche Börse
B) London Stock Exchange
C) NASDAQ
D) NYSE Euronext (US)

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A) the relationship between a hire-car company and the persons who hire that company's cars regarding the treatment of those cars
B) the relationship between high-level military officers and the soldiers who serve under them regarding the willingness of the soldiery to take risks
C) the relationship between a restauranter and the suppliers of produce to that restaurant regarding the freshness of the produce supplied
D) the relationship between a driver and the passengers in a car regarding the safe driving of that car

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A) by voting on issues that concern them
B) by electing members of a board of directors
C) by vetting the decisions of the board of directors
D) by providing oversight of the day to day running of the corporation

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A) Moving funds from savers to borrowers.
B) Spreading out risk-bearing.
C) Printing money for borrowers.
D) Moving funds though time.

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A) Profits from the sales of popular models will be lost when returned to the shareholders in the form of dividends.
B) New models will require a lot of money to develop and bring to market before they generate any revenue.
C) The company will have built up debts which must be repaid in order to bring the current models to market.
D) Equity must be raised to finance the development of new models to replace the existing models.

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B

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A) It trades the second largest volume of shares in the world.
B) Shares sold on it are exchanged between investors without any involvement of the issuing corporation.
C) The exchange has rules that attempt to ensure that bid and ask prices do not get too far apart
D) NASDAQ is called a secondary market because NYSE is considered a primary market.

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A) $0
B) $2.10
C) $2.60
D) $3.90

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A corporation has a separate legal identity from those of its owners.This separation gives the owners limited liability for the actions of the corporation.The down side is the process of double taxation for each dollar earned by the corporation,once when it is earned by the corporation and subsequently when it is passed on to the owners.

A) It is best for the control of the finances of a corporation to be in the hands of a disinterested third party.
B) The interests of the various owners may conflict with each other.
C) The owners may not be U.S.citizens or residents.
D) There are often many owners,and they can often change as they buy and sell stock.

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A) NASDAQ
B) S&P 500
C) NYSE
D) Euronext

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A) the difference in price available for an immediate sale of a stock and the immediate purchase of that stock
B) all of the costs and fees that a stock exchange charges in order to process a transaction
C) the rise or fall in the value of a stock between the time it is acquired by an investor and sold by that investor
D) the difference in the selling price of a stock between different exchanges

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A) 1 cent
B) 3 cents
C) 6 cents
D) 12 cents

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A) The financial manager should seek to make investments that do not harm the interests of the stockholders.
B) The decisions taken by the financial manager should be solely influenced by the benefit to the company since,by maximizing its fitness,he or she will also maximize the benefits of that company to the shareholders.
C) The financial manager should consider the interests and concerns of large shareholders a priority,so the needs of those who hold a controlling interest in the company are met.
D) In general,all shareholders will agree that they are better off if the financial manager works to maximize the value of their investment.

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