Question 1

Costs associated with the conflicts between the bondholders and the shareholders are called

Accepted Answer

Agency costs

Answer

Legal costs

Answer

Administrative costs

Answer

Bankruptcy costs

Question 2

Agency costs are incurred by a corporation because:

Accepted Answer

All of the above

Answer

Shareholders incur monitoring cost

Answer

Separation of ownership and management

Answer

Managers may not attempt to maximize the value of the firm

Question 3

The financial goal of a corporation is to:

Accepted Answer

Maximize the value of the firm for the shareholders

Answer

Maximize managers' benefits

Answer

Maximize profits

Answer

Maximize sales

Question 4

The purchase of real assets is also referred to as the:

Accepted Answer

Investment decision

Answer

Financing decision

Answer

CFO decision

Answer

Capital decision

Question 5

The sale of financial assets is also referred to as the:

Accepted Answer

Financing decision

Answer

CFO decision

Answer

Capital decision

Answer

Investment decision

Question 6

The mixture of debt and equity, used to finance a corporation is also known as:

Accepted Answer

Capital structure

Answer

Capital budgeting

Answer

Investing

Answer

Treasury

Question 7

Corporations, potentially, have infinite life because:

Accepted Answer

of separation of ownership and management

Answer

it has limited liability

Answer

none of the above

Answer

it is a legal entity

Question 8

Limited liability is an important feature of:

Accepted Answer

Corporations

Answer

Partnerships

Answer

Sole proprietorships

Answer

All of the above

Question 9

The following are examples of intangible assets except:

Accepted Answer

Building

Answer

Trademarks

Answer

Patents

Answer

Technical expertise

Related quizzes