FINC 409: Quiz #1

Dividends

Not all cash a company generates will be returned to the investors. Which of the following will NOT reduce the amount of capital returned to the investors?

All the managers above use finance

Which of the following managers would NOT use finance?

1. Operational Managers

2. Marketing Managers

3. Human Resource Managers

4.

Public Corporations

This type of business organization is entirely legally independent from its owners.

Only limited liability

As individual legal entities, corporations assume liability for their own debts, so the shareholders hold

Maximizing the Stock Price

For corporations, maximizing the value of owner's equity can also be stated as

Offer the managers an equity stake in the firm

Which of the following is an example of aligning managers' personal interests with those of the owners?

1. allow the managers to have as many perks as they request

2. pay the managers high salaries

3. offer the managers an equity stake in the firm

4. trust the managers' actions as they will always act in the owners' best interest

Corporate Governance

This is the set of laws, policies, incentives, and monitors designed to handle the issues arising from the separation of ownership and control.

Unlimited Liability

The biggest disadvantage of the sole proprietorship is

All of the above

According to the new Tax Cuts and Jobs Act (TCJA) of 2017, which of the following statements are true?

1. Changes in tax law can lead to making different financial decisions.

2. The new law reduces the amount of debt interest that can be deducted.

3. Companies may wish to use more equity financing and less debt financing.

4. All of the above

are elected by shareholders.

The board of directors