Corporate dividends represent:
tax-free income for the recipient because they are distributions of pretax income.
tax-free income for the recipient because they are distributions of aftertax income.
pretax income from the corporation which becomes taxable income for the recipient.
taxable income for both the corporation and the shareholder, whether or not dividends are
paid to shareholders.
aftertax income from the corporation which becomes taxable income for the recipient.
References
Multiple Choice Learning Objective:
01-03 Articulate the
financial implications
of the different forms
of business
organization.
Difficulty: 2
Intermediate
Section: 1.2
Corporate Finance
and the Financial
Manager
38.
Award: 10.00 points
Financial managers should primarily focus on the interests of:
themselves.
the vice president of finance.
their immediate supervisor.
shareholders.
the board of directors.
References
Multiple Choice Learning Objective:
01-02 Explain the
goal of financial
management.
Difficulty: 1 Basic Section: 1.3 Forms of
Business
Organization
39.
Award: 10.00 points
Which one of the following best states the primary goal of financial management?
Maximize current dividends per share
Maximize the current value per share
Avoid financial distress
Maximize profit
Maintain steady growth while increasing current profits
References
Multiple Choice Learning Objective:
01-02 Explain the
goal of financial
management.
Difficulty: 1 Basic Section: 1.3 Forms of
Business
Organization
40.
Award: 10.00 points
Which one of the following best illustrates that the management of a firm is adhering to the goal of
financial management?
An increase in the amount of the quarterly dividend
A decrease in the per unit production costs
An increase in the number of shares outstanding
A decrease in the net working capital
An increase in the market value per share
References
Multiple Choice Learning Objective:
01-02 Explain the
goal of financial
management.
Difficulty: 2
Intermediate
Section: 1.3 Forms of
Business
Organization
41.
Award: 10.00 points
Financial managers should strive to maximize the current value per share of the existing stock to:
ensure the company will grow in size at the maximum possible rate.
provide the greatest opportunity for employees to earn high salaries.
best represent the interests of the current owners of the firm.
increase the current dividends per share.
create the possibility of rewarding high-performing managers with shares of stock.
References
Multiple Choice Learning Objective:
01-02 Explain the
goal of financial
management.
Difficulty: 2
Intermediate
Section: 1.3 Forms of
Business
Organization
42.
Award: 10.00 points
Decisions made by financial managers should primarily focus on increasing the:
size of the firm.
growth rate of the firm.
gross profit per unit produced.
market value per share of outstanding stock.
total sales.
References
Multiple Choice Learning Objective:
01-02 Explain the
goal of financial
management.
Difficulty: 2
Intermediate
Section: 1.3 Forms of
Business
Organization
43.
Award: 10.00 points
The Sarbanes-Oxley Act of 2002 is a governmental response to:
decreasing corporate profits.
the terrorist attacks on 9/11/2001.
the harm caused to stock markets by SARS, MERS, COVID-19, and other pandemics.
deregulation of the stock exchanges.
management greed and abuses.
References
Multiple Choice Learning Objective:
01-04 Explain the
conflicts of interest
that can arise
between managers
and owners.
Difficulty: 1 Basic Section: 1.3 Forms of
Business
Organization
44.
Award: 10.00 points
Which one of the following is an unintended result of the Sarbanes-Oxley Act?
More detailed and accurate financial reporting
Increased management awareness of internal controls
Corporations delisting from major exchanges
Increased responsibility for corporate officers
Identification of internal control weaknesses
References
Multiple Choice Learning Objective:
01-04 Explain the