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MCC FINC 1010 FINAL EXAM QUESTIONS WITH 100% CORRECT ANSWERS!!
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MCC FINC 1010 FINAL EXAM QUESTIONS WITH 100% CORRECT ANSWERS!!
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MCC FINC 1010 FINALEXAM QUESTIONS
WITH 100% CORRECT
ANSWERS!!
MCC FINC 1010
Evatee 10/1/24 MCC FINC 1010
,MCC FINC 1010 FINAL EXAM QUESTIONS
WITH 100% CORRECT ANSWERS!!
Chapter 1 Answer - Chapter 1
Chief Financial Officer (CFO) Answer - in charge of accounting, treasury, credit,
legal, capital budgeting, investor relations, security analyst relations, and
investment decisions.
Proprietorship and Partnership Advantages and Disadvantages Answer - Pro:
Ease of formation
Subject to few regulations
No corporate income taxes
Cons:
Difficult to raise capital
Unlimited liability
Limited Life
Corporation Advantages and Disadvantages Answer - Pros:
Unlimited Life
Easy transfer of ownership
Limited Liability
Ease of raising capital
, Cons:
Double taxation
Cost of setup and report filing
Stock Price vs. Intrinsic Value Answer - Intrinsic value is an estimate of the
stock's "true" value based on accurate risk and return data. Stock price is
simply the current market value.
In equilibrium stock price = intrinsic value
Stockholder-Manager Conflicts Answer - Managers are naturally inclined to act
in their own best interests (which are not always the same as the interest of
stockholders).
But the following factors affect managerial behavior:
-Managerial compensation packages that motivate them to maximize long run
shareholder wealth
-Direct intervention by shareholders
-The threat of firing
-The threat of takeover (happens when stock price falls below intrinsic value)
Stockholder-Debtholder Conflicts Answer - Stockholders are more likely to
prefer riskier projects, because they receive more of the upside if the project
succeeds. By contrast, bondholders receive fixed payments and are more
interested in limiting risk.
Bondholders are particularly concerned about the use of additional debt.
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