Principles of Managerial Finance 15th Global Edition by Chad J. Zutter Test bank

B) the owners of the firm also manage the firm
C) managers serve on a firm's board of directors
D) a firm is organized as a sole proprietorship
Answer:  A
Diff: 2
Topic:  Managing the Firm
Learning Obj.:  LG 6
Learning Outcome:  F-01
AACSB:  Reflective Thinking
 

22) Which of the following works as a conduit of information between the firm and its investors?
A) the treasurer
B) the controller
C) the director of internal audit
D) the director of investor relations
Answer:  D
Diff: 1
Topic:  Managing the Firm
Learning Obj.:  LG 3
Learning Outcome:  F-01
AACSB:  Analytical Thinking
 
23) ________ decisions refer to how a firm manages its short-term resources on a day-to-day basis.
A) Financing
B) Investment
C) Working capital
D) Managerial finance
Answer:  C
Diff: 1
Topic:  Managing the Firm
Learning Obj.:  LG 3
Learning Outcome:  F-01
AACSB:  Reflective Thinking
24) There is a tradeoff between risk and return (i.e., to earn higher returns you generally have to take more risk) because ________.
A) investors like risk and return and want more of both
B) investors are risk averse, so they will not accept riskier investments unless they offer higher returns
C) to earn higher returns you have to make bigger investments and bigger investments are always riskier than smaller ones
D) investors care about returns but not about risks
Answer:  A
Diff: 2
Topic:  Managing the Firm
Learning Obj.:  LG 4
Learning Outcome:  F-01
AACSB:  Reflective Thinking
 
25) The time value of money principle implies that all other things being equal, investments that produce profits faster are preferred over those that produce more distant profits.
Answer:  TRUE
Diff: 1
Topic:  Managing the Firm
Learning Obj.:  LG 4
Learning Outcome:  F-01
AACSB:  Analytical Thinking
 

26) The ________ has a role that focuses on budgeting, accounting, and tracking the performance of a single business unit.
A) controller
B) treasurer
C) chief financial officer
D) director of risk management
Answer:  A
Diff: 1
Topic:  Managing the Firm
Learning Obj.:  LG 3
Learning Outcome:  F-01
AACSB:  Reflective Thinking
 
27) When managers are trying to create value for shareholders, their primary focus should be on earnings rather than cash flow.
Answer:  FALSE
Diff: 1
Topic:  Managing the Firm
Learning Obj.:  LG 4
Learning Outcome:  F-01
AACSB:  Analytical Thinking
1.3   Organization forms, taxation, and the principal-agent relationship.
 
1) Which of the following legal forms of organization is most expensive to organize?
A) sole proprietorships
B) partnerships
C) corporations
D) limited partnership
Answer:  C
Diff: 1
Topic:  Legal Forms of Business Organization
Learning Obj.:  LG 5
Learning Outcome:  F-01
AACSB:  Analytical Thinking
 
2) Which of the following legal forms of organization has the ease of dissolution?
A) sole proprietorships
B) partnerships
C) limited partnerships
D) corporations
Answer:  A
Diff: 1
Topic:  Legal Forms of Business Organization
Learning Obj.:  LG 5
Learning Outcome:  F-01
AACSB:  Analytical Thinking
 

3) Under which of the following legal forms of organization is ownership readily transferable?
A) sole proprietorships
B) partnerships
C) limited partnerships
D) corporations
Answer:  D
Diff: 1
Topic:  Legal Forms of Business Organization
Learning Obj.:  LG 5
Learning Outcome:  F-01
AACSB:  Analytical Thinking
 
4) Which of the following forms of organizations is the easiest to form?
A) sole proprietorships
B) limited liability corporation
C) limited partnership
D) S-corporations
Answer:  A
Diff: 1
Topic:  Legal Forms of Business Organization
Learning Obj.:  LG 5
Learning Outcome:  F-01
AACSB:  Analytical Thinking
5) A major weakness of a partnership is ________.
A) the difficulty in maintaining owners' control
B) the difficulty in liquidating or transferring ownership
C) the double taxation of income
D) its high organizational costs
Answer:  B
Diff: 1
Topic:  Legal Forms of Business Organization
Learning Obj.:  LG 5