Reference no: EM132615996

TRUE OR FALSE

Question 1: Shareholders welcome higher short-term profits even when they damage long-term profits.

Question 2: The separation of ownership and management is one distinctive feature of corporations.

Question 3: The primary goal of any company should be to maximize current period profits.

Question 4: Facebook's decision to spend $700 million to acquire Instagram is an investment decision.

Question 5: Capital budgeting decisions are used to determine how to raise the cash necessary for investments.

Question 6: Financial analysts are involved in monitoring the risk associated with investment projects and financing decisions.

Question 7: Financial assets have value because they are claims on the firm's real assets and the cash that those assets will produce.

Question 8: Real assets can be intangible assets.

Question 9: A successful investment is one that increases the value of the firm.

Question 10: A well-designed compensation package can help a firm achieve its goal of maximizing market value.

Question 11: General partners have limited personal liability for business debts in a limited partnership.

Question 12: GlaxoSmithKline's spending of $3.6 billion on research and development of new drugs is a capital budgeting decision but not a financing decision.

Question 13: A major disadvantage of partnerships is that they have double taxation of profits.

Question 14: Deltas's issuance of a $1.0 billion bond is a financing decision.

Question 15: Maximizing profits is the same as maximizing the value of the firm.

Question 16: Investors are responsible for deciding whether to reinvest in the firm's operations or take the profits as a distribution.

Question 17: Making good investment and financing decisions is the chief task of the financial manager.

Question 18: If a project's value is less than its required investment, then the project is financially attractive.

Question 19: Established firms can create value by developing long-term relationships and maintaining a good reputation.

Question 20: Boards of directors are generally appointed by the firm's senior officers

Question 21: The liability of sole proprietors is limited to the amount of their investment in the company.

Question 22: Sole proprietorships face the same agency problems as those associated with corporations.

Question 23: The separation of ownership and management is one distinctive feature of both corporations and sole proprietors.