FI 360 Unit 4: Midterm Exam , with Questions And Answers
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Course
FI 360
Institution
FI 360
FI 360 Unit 4: Midterm Exam , with Questions And Answers. Due Nov 11 at 11:59pm
Points 120
Questions 30
Time Limit 90 Minutes
Instructions
Directions
The midterm exam covers material from week one through week three (Chapters 1
through 5).
The exam consists of 30...
The midterm exam covers material from week one through week three (Chapters 1
through 5).
The exam consists of 30 multiple choice questions.
You will have 90 minutes to complete the midterm exam.
You are only able to take the exam once.
The exam is open textbook and open notes.
The exam is not proctored.
Due Date:
Submit the exam by 11:59 pm, on Sunday of Unit 4, CT.
Attempt History
Attempt Time Score
LATEST Attempt 1 31 minutes 120 out of 120
Correct answers will be available on Nov 12 at 12am.
Score for this quiz: 120 out of 120
Submitted Nov 11 at 8:47pm
This attempt took 31 minutes.
Question 1
pts
,Which of the following statements is CORRECT?
For a stock to be in equilibrium, its intrinsic value must be greater than the actual market price.
Conflicts can exist between stockholders and managers, but potential conflicts are reduced by the
possibility of hostile takeovers.
Corporations and partnerships have an advantage over proprietorships because a proprietor is
exposed to unlimited liability, but the liability of all investors in the other types of businesses is
more limited.
Most business in the U.S. is conducted by corporations, and corporations' popularity results
primarily from their favorable tax treatment.
A good goal for a firm's management is the maximization of expected EPS.
Question 2
pts
Multiple Choice: Conceptual
Please note that some of the answer choices, or answers that are very close, are used in different
questions. This has caused us no difficulties, but please take this into account when you make up exams.
Which of the following statements is CORRECT?
Proprietorships and partnerships generally have a tax advantage over corporations.
In any partnership, every partner has the same rights, privileges, and liability exposure as every
other partner.
Corporations of all types are subject to the corporate income tax.
One of the disadvantages of incorporating your business is that you could become subject to the
firm's liabilities in the event of bankruptcy.
Proprietorships are subject to more regulations than corporations.
Rationale:
, Some corporations (S corporations) are able to avoid the corporate income tax. Proprietorships
and partnerships pay personal income tax, but they avoid the corporate income tax.
Rationale:
Some corporations (S corporations) are able to avoid the corporate income tax. Proprietorships
and partnerships pay personal income tax, but they avoid the corporate income tax.
Question 3
pts
Which of the following statements is CORRECT?
Because bankruptcy requires that corporate bondholders be paid in full before stockholders
receive anything, bondholders generally prefer to see corporate managers invest in high risk/high
return projects rather than low risk/low return projects.
One drawback of forming a corporation is that you lose the limited liability that you would
otherwise receive as a proprietor.
Since bondholders receive fixed payments, they do not share in the gains if risky projects turn
out to be highly successful. However, they do share in the losses if risky projects fail and drive
the firm into bankruptcy. Therefore, bondholders generally prefer to see corporate managers
invest in low risk/low return projects rather than high risk/high return projects.
Potential conflicts between stockholders and bondholders are increased if a firm's bonds are
convertible into its common stock.
One advantage of operating a business as a corporation is that stockholders can deduct their pro
rata share of the taxes the firm pays, thereby eliminating the double taxation investors would face
in a partnership.
Question 4
pts
Which of the following statements is CORRECT?
The CFO is responsible for raising capital and for making sure that capital expenditures are
desirable, but he or she is not responsible for the validity of the financial statements, as the
controller and the auditors have that responsibility.
The CFO generally reports to the firm's chief accounting officer, who is normally the controller.
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