1. The biggest disadvantage of the sole proprietorship is _________________. A. Total control B. Double taxation C. Unlimited liability D. Limited access to capital 2. All of the following are advantages to organizing as a corporation except ____. A. Limited liability B. Double taxation C. Easy access to capital D. Easy to transfer ownership 3. From the perspective of access to capital, the best form of business organization is the _______. A. Corporation B. Partnership C. S Corporation D. Sole proprietorship 4. From the perspective of ownership risk, the best form of business organization is the ______. A. Partnership B. Corporation C. S Corporation D. Sole proprietorship 5. From the perspective of control, the best form of business organization is the __________. A. Partnership B. Corporation C. S Corporation D. Sole proprietorship 6. The overall goal of the financial manager is to _________________. A. Minimize total costs B. Maximize net income C. Maximize earnings per share D. Maximize shareholder wealth 7. All of the following are an example of a fiduciary relationship except: A. a CEO manages the firm B. a bank employee manages deposits C. a financial advisor advises her clients D. the shareholder elects a board member 8. Which of the following statements is correct? A. Accountants are focused on what happened in the past. B. Financial managers are focused on what happened in the past. C. Financial managers double-check the accountant’s statements. D. Both accountants and financial managers use total quality management systems to standardize data. 9. Maximizing owners’ equity value means carefully considering all of the following except _______. A. Which projects to invest in B. How best to increase the firm’s risk C. How to best bring additional funds into the firm D. How best to return the profits from those projects to the owners over time 10. The most common type of business in the United States is the __________. A. Corporation B. Partnership C. Sole Proprietorship D. Hybrid organization such as a limited liability company 11. Attempting to maximizing shareholder value can lead to A. less pollution worldwide. B. minimizing bondholders wealth. C. disasters, like the BP oil spill in the Gulf. D. a long-term outlook by a firms managers. 12. Which of the following statements is correct? A. Shareholder wealth maximization is achieved by minimizing costs or maximizing net profit. B. Shareholder wealth maximization may actually be beneficial for society in the long-run. C. Shareholder wealth maximization is achieved by maximizing market share. D. All of these statements are correct. 13. Unethical behavior by an organization may be from all of the following except; A. Agency costs between stockholders and the public B. poor personal ethics C. a low risk of getting caught D. A focus on long-term success. 14. An employee stock option plan is ________________. A. A plan that only partnerships can use to defer compensation to partners B. A perk usually only given to the board of directors as compensation C. A way to align the interests of employees with those of the owners D. None of these answers are correct 15. A legal duty between two parties where one party must act in the interest of the other party is known as a(n) ______________. A. Fiduciary B. Venture capitalist C. Restricted investor D. Restricted capitalist 16. Restricted stock is: A. a special type of stock that is not transferable from the current holder to others until specific conditions are satisfied. B. a special type of stock that can be converted into corporate bonds after a specific amount of time has elapsed. C. a special type of stock that is a result of offering an employee stock ownership plan. D. None of these answers is correct. 17. All of the following are functions of the board of directors except ________. A. Hire the CEO B. Evaluate the CEO C. Provide reports to the auditors D. Design compensation contracts for the CEO 18. The agenc…
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