Chapter 1 & 2: True and false, discussion questions. Please read and answer each question 1. The objective of the financial managers within the company should be the maximizing the total value of the company's shares. a. True b. False 2. The goal of profit maximization is equivalent to objective of maximizing the price of current shares. a. True b. False 3. The company's goal should be to maximize the shareholders' investment. a. True b. False 4. Three basic roles of the Financial manager are investment, financing and policies of dividends. a. True b. False 5. Only a company's financial decisions affect the stock price. a. True b. False 6. The legal definition of a corporation is "an artificial, invisible, intangible being and its existence is only before the contemplation of law. a. True b. False 7. Shareholders react to poor investment and dividend decisions, causing the total value of the company's stock to go down, they also react to the good decisions causing the stock price to go up. a. True b. False 8. The market price of the shares reflects the value of the company in view of its owner. a. True b. False 9. Sole proprietorship does not have any legal business structure separated from its owner. a. True b. False 10. In a General partnership the other partners are not responsible for damages arising out of the actions of any partner, when the the employee is doing work for the company. a. True b. False 11. There is no legal distinction between the business assets and the personal assets of any of the owners in the limited company. a. True b. False

12. The owners of a corporation enjoy limited liability. a. True b. False 13. The corporation is a separate legal entity from the owners; this makes it possible for the corporation can continue to operate even if one of its shareholders dies. a. True b. False 14. The money market includes transactions in short-term financial instruments a. True b. False 15. The capital market consists of the institutions and procedures that provide transactions in long-term financial instruments. a. True b. False 16. Short-term transactions are carried out in the capital market. a. True b. False 17. In a private issue of securities a large number of investors they have the opportunity to buy a portion of the investment. a. True b. False 18. The highest rating a bond can have is AAA. a. True b. False 19. The company's objective should be: maximizing the shareholders' investment a. True b. False

20. Which of the following company objectives is synonymous (or equivalent) to the maximizing the economic health of shareholders?

21. Which of the following is an advantage of sole proprietorship?

22. The real owners of the corporation are:

23. Which of the following categories of owners have limited liability?

24. Which of the following are characteristics of financial markets:

25. What kind of value is shown on the company's balance sheet?

26. Interest on corporate bonds is typically paid: