[Solved] Liberty University BUSI 530 Exam 1 Liberty University BUSI530 Exam 1 Financial managers should only accept investment projects that: Multiple Choice increase the current profits of the firm. can increase the firm’s market share. earn a higher rate of return than the firm currently earns on its existing projects. Item 2 Item 2 3 of 3 points awarded Item Scored Unlimited liability is faced by the owners of: Multiple Choice corporations. partnerships and corporations. sole proprietorships and general partnerships. Correct all forms of business organization. Item 3 3/3 points awarded ItemScored Item 3 Item 3 3 of 3 points awarded Item Scored The term “capital structure” refers to: Multiple Choice the mix of long-term debt and equity financing. Correct the length of time needed to repay debt. whether or not the firm invests in capital budgeting projects. the types of assets a firm acquires. Item 4 0/3 points awarded ItemScored Item 4 Item 4 0 of 3 points awarded Item Scored Which of the following appears to be the most appropriate goal for corporate management? Maximizing market value of the company’s shares Correct Maximizing the company’s market share Maximizing the current profits of the company —ANSWER INCORRECT Incorrect Minimizing the company’s liabilities Item 5 One continuing problem with managerial incentive compensation plans is that: the plans increase agency problems. managers prefer guaranteed salaries. their effectiveness is difficult to evaluate. Correct the plans do not reward shareholders. 3/3 points awarded ItemScored Item 6 Item 6 3 of 3 points awarded Item Scored In a partnership form of organization, income tax liability, if any, is incurred by: Multiple Choice the partnership itself. the partners individually. Correct both the partnership and the partners. neither the partnership nor the partners. Item 7 3/3 points awarded ItemScored Item 7 Item 7 3 of 3 points awarded Item Scored A board of directors is elected as a representative of the corporation’s: Multiple Choice top management. stakeholders. shareholders. Correct customers. Item 8 3/3 points awarded ItemScored Item 8 Item 8 3 of 3 points awarded Item Scored Which one of the following statements is not characteristic of mutual funds? Multiple Choice They are always considered to be financial institutions. Correct They raise money by selling shares to investors. They pool the savings of many investors. They offer professional management and portfolio diversification. Item 9 Item 9 3 of 3 points awarded Item Scored A capital investment that generates a 10% rate of return is worthwhile if: Multiple Choice corporate bonds of similar risk offer 8% rates of return. Correct corporate bonds of similar risk offer 11% rates of return. top-quality corporate bonds offer 10% rates of return. the expected rate of return on the stock market is 12%. Item 10 3/3 points awarded ItemScored Item 10 Item 10 3 of 3 points awarded Item Scored Which one of the following is least liquid? Multiple Choice Foreign currency U.S. Treasury bonds Real estate Correct Bank deposit Item 11 3/3 points awarded ItemScored Item 11 Item 11 3 of 3 points awarded Item Scored Which one of these enterprises generally acts as an underwriter for an initial public offering? Multiple Choice Commercial bank Government Investment bank Correct Insurance company Item 12 Item 12 0 of 3 points awarded Item Scored Foreign currencies are traded: only by banks in New York and London. over the counter. Correct on both the NYSE and NASDAQ. on the Intercontinental Exchange. Item 13 Item 13 3 of 3 points awarded Item Scored If Apple Computer Inc. is used as the model, then new firms should expect to raise capital in which one of these orders? Start with the first money raised. Multiple Choice Owners, venture capitalists, suppliers, public investors Owners, suppliers, ven…
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