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The person charged with running the corporation by instituting the rules and policies set by the board of directors is called:


A) the chief operating officer.
B) the company president.
C) the chief executive officer.
D) the chief financial officer.

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Which of the following statements is FALSE?


A) In bankruptcy,management is given the opportunity to reorganize the firm and renegotiate with debt holders.
B) Because a corporation is a separate legal entity,when it fails to repay its debts the people who lent to the firm,the debt holders,are entitled to seize the assets of the corporation in compensation for the default.
C) As long as the corporation can satisfy the claims of the debt holders,ownership remains in the hands of the equity holders.
D) If the corporation fails to satisfy debt holders' claims,debt holders may lose control of the firm.

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Which of the following is NOT an advantage of a sole proprietorship?


A) Single taxation
B) Ease of setup
C) Limited liability
D) No separation of ownership and control

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The largest stock market in the world by market capitalization is:


A) the London Stock Exchange.
B) NASDAQ.
C) the American Stock Exchange.
D) the New York Stock Exchange.

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A sole proprietorship is owned by:


A) one person.
B) two or more persons.
C) shareholders.
D) bankers.

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Which of the following is/are an advantage of incorporation?


A) Access to capital markets
B) Limited liability
C) Unlimited life
D) All of the above

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Explain the main differences between the NYSE and NASDAQ stock markets.

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Key points:
NYSE has physical location -...

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Use the table for the question(s)below. Consider the following two quotes for XYZ stock: Use the table for the question(s)below. Consider the following two quotes for XYZ stock: -What are your net proceeds if you purchased 2500 shares of XYZ stock on November 11th and then sold them a week later on November 18th? -What are your net proceeds if you purchased 2500 shares of XYZ stock on November 11th and then sold them a week later on November 18th?

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buy at ask price 11/11 = 2500 ...

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You are a shareholder in a "C" corporation.This corporation earns $4 per share before taxes.After it has paid taxes,it will distribute the remainder of its earnings to you as a dividend.The dividend is income to you,so you will then pay taxes on these earnings.The corporate tax rate is 21% and your tax rate on dividend income is 15%.The effective tax rate on your share of the corporation's earnings is closest to:


A) 15%.
B) 33%.
C) 45%.
D) 50%.

Correct Answer

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Use the table for the question(s) below. Consider the following two quotes for XYZ stock: Use the table for the question(s) below. Consider the following two quotes for XYZ stock: -How much would you receive if you sold 200 shares of XYZ stock on November 11th? A) $5050 B) $5040 C) $5186 D) $5200 -How much would you receive if you sold 200 shares of XYZ stock on November 11th?


A) $5050
B) $5040
C) $5186
D) $5200

Correct Answer

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Which of the following organization forms accounts for the greatest number of firms?


A) "S" corporation
B) Limited partnership
C) Sole proprietorship
D) "C" corporation

Correct Answer

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Which of the following statements regarding limited partnerships is TRUE?


A) There is no limit on a limited partner's liability.
B) A limited partner's liability is limited by the amount of their investment.
C) A limited partner is not liable until all the assets of the general partners have been exhausted.
D) A general partner's liability is limited by the amount of their investment.

Correct Answer

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If you buy shares of Coca-Cola on the primary market:


A) Coca-Cola receives the money because the company has issued new shares.
B) you buy the shares from another investor who decided to sell the shares.
C) you buy the shares from the New York Stock Exchange.
D) you buy the shares from the Federal Reserve.

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A ________ is when a rich individual or organization purchases a large fraction of the stock of a poorly performing firm and in doing so gets enough votes to replace the board of directors and the CEO.


A) shareholder proposal
B) leveraged buyout
C) shareholder action
D) hostile takeover

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The most senior financial manager in a corporation is usually called:


A) the chief executive officer.
B) the chief financial officer.
C) the chief operating officer.
D) the chairman of the board.

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Which of the following statements is FALSE?


A) On NASDAQ,stocks can and do have multiple market makers who compete with each other.Each market maker must post bid and ask prices in the NASDAQ network where they can be viewed by all participants.
B) Bid prices exceed ask prices.
C) Because customers always buy at the ask and sell at the bid,the bid-ask spread is a transaction cost investors have to pay in order to trade.
D) Prior to 2005,market makers (known on the NYSE as specialists) matched buyers and sellers on the floor of the NYSE.

Correct Answer

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An agency problem can be alleviated:


A) when a firm is a sole proprietorship.
B) by compensating managers in such a way that acting in the best interest of shareholders is also in the best interest of managers.
C) by asking managers to take on more risk than they are comfortable taking.
D) A and B

Correct Answer

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The distinguishing feature of a corporation is that:


A) there is no legal difference between the corporation and its owners.
B) it is a legally defined,artificial being,separate from its owners.
C) it spreads liability for its corporate obligations to all shareholders.
D) it provides limited liability only to small shareholders.

Correct Answer

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