Final Exam Please submit your final exam answers through your Assignments Folder. Create a word document that contains your numbered answers to the exam. There is no need to retype the questions. Number your answers to correspond with the exam. You will then submit the file through the Assignment Folder in the WebTycho classroom. Alternatively, you may type your answers directly in the Text area of the Create Assignment window (within the Assignment Folder). With either method please clearly mark your exam 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 f



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