Exam 1: The Corporation

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

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

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

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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.

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

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

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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

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

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

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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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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) 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.

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Key points:
NYSE has physical location -...

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

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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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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.

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