WHICH OF THE FOLLOWING FORMS OF BUSINESS ORGANIZATION HAS THE GREATEST ABILITY TO ATTRACT NEW CAPITAL?

21 May WHICH OF THE FOLLOWING FORMS OF BUSINESS ORGANIZATION HAS THE GREATEST ABILITY TO ATTRACT NEW CAPITAL?

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answers with your name.

1)
Which of the following forms of business organization has the greatest ability
to attract new capital?

A)
sole proprietorship

B)
general partnership

C) corporation

D)
none of the above

2)
Which of the following forms of business organizations provide limited
liability to all its owners?

A)
limited partnership

B)
general partnership

C) corporation

D)
both B and C

3) Which of the following best describes the goal of
the firm?

A)
the maximization of the total market value of the firm’s common stock

B)
risk minimization

C)
profit maximization

D)
All of the above are equally important.

4) Which of the following categories of owners have
limited liability?

A)
sole proprietors

B) shareholders of a corporation

C)
general partners

D)
both A and B

5)
Which of the following applies to minimize the disruptions to the continuation
of business in a general partnership?

A)
the partnership can be extended only through the courts of law.

B)
there is no way to accomplish this; that is, the partnership dies when the
partner dies or retires, or withdraws.

C)
No continuation is possible upon the death of a partner, but only forcases of
withdrawal of a partner, and hence is rarely practiced.

D)
the partnership can be extended through procedures specified in the partnership
agreement.

6) If an investor is said to be “risk
averse” then that investor

A)
is not behaving in a typical manner.

B)
will only take on the least risk possible.

C)
will only take on additional risk if they expect to be compensated in the form
of additional return.

D)
will not be induced to take on any risk.

7)
Maximization of shareholder wealth as a goal is superior to profit maximization
because

A)
it considers the time value of the money.

B) following the goal of shareholder
wealth maximization will ensure high stock prices.

C)
it considers uncertainty.

D) A and C

8) Which of the following is an advantage of the
sole proprietorship?

A)
easily transferred ownership

B)
limited liability for its owners

C)
no significant legal requirements for starting the business

D)
double taxation for its owners

9)
Which of the following is considered an advantage of the corporate form of
business organization?

A) limited liability of owners

B)
ability to raise large amounts of capital

C)
ease of transferring ownership

D)
all of the above

E)
none of the above

10) Capital market transactions include which of the
following?

A) common stock of a public
corporation

B)
all securities that are purchased in the open market

C) any security that is purchased
from a brokerage firm that is well capitalized

D)
U.S. Treasury bills

E)
all of the above

11)
The costs associated with issuing securities to the public can be high. Some
types of securities have greater expenses associated with them than others.
Which of the following is the most costly security to issue?

A)
corporate bonds

B)
preferred stock

C) common stock

D)
All of the above are about equal in cost to issue.

12)
When an investment-banking firm “underwrites” an issue of securities,
the firm is performing which of the following?

A) offering to purchase the securities from the firm,
thereby assuming the risk of resale to investors

B) giving legal advice to the firm
that is issuing the securities

C) agreeing to provide insurance
that the firm’s securities will sell for a price that is established by the
firm

D) agreeing to market the securities
to investors for a fee

13)
Which of the following refers to all institutions and procedures that provide
for transactions in short-term debt instruments generally issued by borrowers
with very high credit ratings?

A)
commercial banks

B)
capital market

C)
stock market

D)
money market

14) Which of the following is an advantage of a
private placement?

A)
Every issue is standardized, thus it is more efficient.

B)
It is slower, thus it is a less risky process.

C)
Greater fees for the investment bankers.

D)
None of the above are true.

15)
The majority of public offerings of securities must be registered with the
Securities and Exchange Commission, a costly and time consuming process. Which
of the following methods allows corporations with the ability to “speed
up” the registration process?

A)
File a secondary offering.

B)
Offer a privileged subscription.

C)
File a shelf registration.

D)
Offer an underwriting.

16) Which of the following does require registration
with the SEC?

A)
issues sold entirely intrastate

B)
public utility and railroad issues

C)
public issues with proceeds of more than $1.5 million annually

D)
issues with a maturity of 270 days or less

E)
All of the above must be registered with the SEC.

17)
Which of the following is not a benefit provided by the existence of organized
security exchanges?

A)
establishing and publicizing fair security prices

B)
helping businesses raise new capital

C) standardization of all debt
agreements

D)
providing a continuous market

18) Which of the below does not belong on the asset
side of a balance sheet?

A)
accounts receivable

B) accruals

C)
cash

D)
accumulated depreciation

19) Which of the below belongs in the liability
section of a balance sheet?

A)
accumulated depreciation

B)
interest expense

C) accounts payable

D)
preferred stock

20) Which of the below belongs on the asset side of
a balance sheet?

A)
common stock

B)
accruals

C) accounts receivable

D)
depreciation expense

21)
Which of the following best describes free cash flow from an asset perspective?

A)
cash flows generated from accruals and accounts payable

B)
earnings before interest and taxes

C)
cash available to common stockholders that have no cost to the firm

D) the after-tax cash flows
generated from operations less the firm’s investments in operating working
capital, fixed and other assets

22)
What information does a firm’s statement of cash flows provide to the viewing
public?

A) a report of revenues and
expenses for a defined period of time

B) a complete listing of all of a firm’s
cash receipts and cash expenditures for a defined period of time

C) an itemization of all of a firm’s
assets, liabilities, and equity for a defined period of, time

D) a report of investments made and
their cost for a specific period of time

23)
Corporations are allowed to deduct specific expenses for income tax purposes.
Several of these expenditures are deductible but they are not cash expenses.
Which of the following is not a cash expenditure but is still deductible for
income tax purposes?