1) Which of the following statements is correct?

a.In a partnership, liability for other partners' misdeeds includes but is limited to the amount a particular partner has invested in the business.

b.Partnerships must be formed according to specific rules, which include the filing of a formal written agreement with state authorities where the partnership does business.

c.A fast growth company would be more likely to set up a partnership for its business organization than would a slow-growth company.

d.Under partnership law, if any partner is unable to meet his or her pro rata claim in the event the partnership goes bankrupt, the remaining partners must make good on the unsatisfied claims.

e.A major disadvantage of a partnership as a form of business organization is the high cost and practical difficulty of its formation.

2) Which of the following is an assumption of most of the traditional models in finance?

a.No nation can place constraints on the transfer of corporate resources.

b.A competitive marketplace exists in which the terms of trade are determined by the participants.

c.Cash flows in various parts of a multinational corporate system are always denominated in the same currencies.

d.The exchange rate is determined by direct negotiation between the host government and the multinational corporation.

e.The ability to curtail unprofitable operations is uniform in all the countries in which subsidiaries operate.

3) How is the net working capital calculated?

a.Net working capital = total liabilities minus retained earnings

b.Net working capital = total assets minus current assets

c.Net working capital = total liabilities minus current liabilities

d.Net working capital = current assets minus current liabilities

e.Net working capital = total equity minus retained earnings

4) A firm's net income as reported on its income statement is known as _____.

a.operating cash flow

b.net cash flow

c.noncash income

d.accounting profit

e.net sales

5) A federal deficit occurs when:

a.a government issues securities to the public.

b.stock prices of private companies decrease.

c.social security benefits given to citizens are reduced.

d.a government's expenses are more than its tax revenues.

e.money supply in the market is low.