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Essentials of corporate finance2c 7e

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PAGE # 1 Essentials of Corporate Finance, 7/e Solved McQs PAGE # 2 Introduction to Financial Management Q#1 Business finance includes determining which long-term assets a firm should purchase. A) True B) False Q#2 The board of directors has the power to act on behalf of the shareholders to hire and fire the operating managers of the firm. In a legal sense, the directors are "principals" and the shareholders are "agents." A) True B) False Q#3 In capital budgeting, the financial manager tries to identify investment opportunities that will increase the value of the firm. A) True B) False Q#4 Three advantages of the corporate form of organization are the ease of transfer of ownership, limited liability for the shareholders and an unlimited life for the business entity. A) True B) False Q#5 The intent of the Sarbanes-Oxley Act of 2002 is to protect the public from accounting fraud and financial malpractice. A) True B) False Q#6 Financial managers are responsible for determining: I. how suppliers will be paid. II. the appropriate level of debt for a firm. III. which projects a firm should undertake. IV. how to invest the firm's cash. A) I and II only B) II and III only C) I, II and III only D) II, III and IV only E) I, II, III and IV Q#7 Ann is interested in purchasing Ted's factory. Since Ann is a poor negotiator, she hires Mary to negotiate a purchase price. Identify the parties to this transaction. A) Mary is the principal and Ann is the agent. B) Ted is the principal and An ...
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