Which of the following forms of organizations is the easiest to form?

A) sole proprietorships

B) limited liability corporation

C) limited partnership

D) corporations

______ 20. Which of the following is a strength of a corporation?

A) low taxes

B) limited liability

C) low organization costs

D) less government regulation

______ 21. An effective ethics program ________.

A) can weaken corporate value

B) has no effect on a corporation's value

C) can enhance a corporation's value

D) will result in high employee attrition rate

______ 22. In a corporation, the Board of Directors are elected by the ________.

A) chief executive officer

B) creditors

C) stockholders

D) employees

______ 23. Which of the following assists companies in raising capital, advises firms on major transactions such as mergers or financial restructuring, and engages

in trading and market making activities?

A) investment banks

B) securities exchanges

C) mutual funds

D) commercial banks

______ 24. The ________ market is where securities are initially issued and the ________ market is where pre-owned securities (not new issues) are traded.

A) primary; secondary

B) money; capital

C) secondary; primary

D) primary; money

______ 25. The federal regulatory body governing the sale and listing of securities is called the ____________________________.

A) IRS

B) FASB

C) GAAP

D) SEC

______ 26. The stockholders' annual report must include ________.

A) common-size financial statements

B) an income statement

C) an advance tax statement

D) the margin of safety report

______ 27. The 2002 law that established the Public Company Accounting Oversight Board (PCAOB) was called ________.

A) the McCain-Feingold Act

B) the Harkins-Oxley Act

C) the Sarbanes-Harkins Act

D) the Sarbanes-Oxley Act

______ 28. Operating profit is known as ________.

A) earnings after interest and taxes

B) earnings before interest and taxes

C) earnings before depreciation and taxes

D) earnings after tax

______ 29. Which of the following is a current liability?

A) accounts receivable

B) cash

C) notes payable

D) inventory

______ 30. When preparing the retained earnings statement, ________ is(are) subtracted in order to derive at the ending balance of retained earnings.

A) net profits after taxes

B) interest expense

C) depreciation

D) dividends

______ 31. The ________ ratios are primarily used as measures of return.

A) liquidity

B) activity

C) debt

D) profitability

______ 32. The ________ of a business firm is measured by its ability to satisfy its short-term obligations as they come due.

A) activity

B) liquidity

C) debt

D) profitability

______ 33. ________ ratios are a measure of the speed with which various accounts are converted into sales or cash.

A) Activity

B) Liquidity

C) Debt

D) Profitability

______ 34. ________ is a statistical measure of the relationship between any two series of numbers.

A) Coefficient of variation

B) Standard deviation

C) Correlation

D) Probability

______ 35. The correlation of returns between Asset A and Asset B can be characterized as ________. (See table above).

A) perfectly positively correlated

B) perfectly negatively correlated

C) uncorrelated

D) partially correlated

______ 36. If you were to create a portfolio designed to reduce risk by investing equal proportions in each of two different assets, which portfolio would you recommend? (See Table above).

A) Assets A and B

B) Assets A and C

C) none of the available combinations

D) cannot be determined