1) The controller of a company is a key subordinate of the _____.

a.treasurer

b.financial vice president

c.chief financial officer

d.credit manager

e.director of capital budgeting

2) Compared to corporations, what is the primary disadvantage of partnerships as forms of business organizations?

a.The tax rates applied to partnerships are higher than the tax rates applied to corporations.

b.Any dividends paid to the owners of a partnership business are taxed twice, once at the partnership level and once at the personal, or individual level.

c.Partnerships generally are more complex to form (start up) than corporations.

d.Partnerships have unlimited lives whereas corporations do not.

e.The owners of a partnership, that is, the partners, have unlimited liability when it comes to business obligations whereas the owners of a corporation have limited liability.

3) The effective annual rate of an investment is equal to its quoted interest rate when the investment is compounded _____.

a.continuously

b.daily

c.monthly

d.semi-annually

e.annually

4) Which of the following statements is true of agency problems?

a.Regardless of economic conditions, if a firm's stock price falls during the year, this indicates that the firm's managers must not be acting in the best interests of the shareholders.

b.One method of controlling agency problems is to engage in the taking of "poison pills."

c.One of the best means to control agency problems is to require the managers and other important decision makers of the firm to also be owners of the firm.

d.Agency problems probably would not exist if the important decisions of a firm were made by persons who have no vested interests, such as ownership, in the firm.

e.Shareholders solve the agency problems by hostile takeover of the firm from the managers.

5) How is the book value per share calculated?

a.Book value per share = Common equity Total number of shares outstanding

b.Book value per share = Total shares issued Per share par value

c.Book value per share = Current assets - Current liabilities

d.Book value per share = Total assets Total number of shares outstanding

e.Book value per share = Earnings available to common stockholders Total number of shares outstanding