Reference no: EM133000773

Problem 1) Which of the following is a disadvantage starting a business as a corporation?

Select one:

a. Business profits are taxed as corporate and personal income.

b. Unlimited liability for people who invest in the business.

c. Difficult to sell the ownership interest in a corporation.

d. The life of the corporation is limited to the life of its owners.

e. Difficult to raise equity capital.

Problem 2) Which of the following activities will help achieve the primary goal of financial management?

Select one:

a. A company announces a plan to buy back 10% of its common shares to increase stock price

b. The board approves a plan to borrow money to finance a large cash dividend

c. A new product is approved for production after careful research and testing

d. The company president cuts advertising and research costs to meet market expectations

Problem 3) Which of the following won't reduce a conflict of interest between the shareholders and senior management team?

Select one:

a. Hiring an internal auditor who installs and tests a system of internal controls within the company

b. Paying the Chief Executive Officer a large bonus because stock price had doubled within six months

c. A corporate raider (e.g. outside investor) begins a hostile takeover attempt of an underperforming company

d. Creating a board of directors audit committee composed of independent board members with finance expertise