51. Which of the following help convince managers to work in the best interest of the stockholders? I. compensation based on the value of the stock II. stock option plans III. threat of a company takeover IV. threat of a proxy fight a. I and II only b. III and IV only c. I, II, and III only d.I, III, and IV onlyE. I, II, III, and IV
52. Which form of business structure faces the greatest agency problems? a. sole proprietorship b. general partnership c. limited partnershipD. corporation e. limited liability company
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53. Which of the following are agency costs? I. forgoing an investment opportunity which would add to the market value of the owner’s equity II. paying a dividend to each of the existing shareholders III. purchasing new equipment which increases the value of each share of stock IV. hiring outside auditors to verify the accuracy of the company financial statements a. II and III only b. I and III onlyC. I and IV only
d. II and IV only e. I, II, and IV only
54. Which one of the following parties is considered a stakeholder of a firm?A. employee b. short-term creditor c. long-term creditor d.preferred stockholder e. common stockholder
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55. Which of the following represent cash outflows from a firm? I. issuance of securities II. payment of dividends III. new loan proceeds IV. payment of government taxes a. I and III only B. II and IV only
c. I and IV only d. I, II, and IV only e. II, III, and IV only
56. Which of the following represent means by which cash flows from a corporation back into the financial markets? I. repayment of long-term debt II. payment of government taxes III. payment of loan interest IV. sale of corporate stock a. I and II onlyB. I and III only c. II and IV only d. I, III, and IV only e. I, II, and III only
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57. Which one of the following is a primary market transaction? a. a dealer selling shares of stock to an individual investor
B. a dealer buying newly issued shares of stock from a corporation
c. an individual investor selling shares of stock to another individual d.a bank selling shares of a medical firm to an individual e. a sole proprietor buying shares of stock from an individual investor
58. The transfer of ownership of outstanding shares of a NYSE listed stock: a. takes place in the primary market. b. occurs in a dealer market. C. is facilitated in the secondary markets.
d.creates an immediate tax liability for both the seller and the buyer. e. is referred to as a private placement.
59. Which of the following statements concerning auction markets is (are) correct? I. NASDAQ is an auction market. II. The NYSE is an auction market. III. All trades involve a dealer in an auction market. IV. An auction market is called an over-the-counter market. a. I only B. II only
c. I and III only d. II and III only e. II and IV only
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60. Which one of the following statements concerning stock exchanges is correct? a. The NYSE has more listed stocks than NASDAQ. b. The NYSE is a dealer market. c. The exchange with the strictest listing requirements is NASDAQ.D. Some large companies are listed on NASDAQ. e. Most debt securities are traded on the NYSE. 61. Dealer markets: a. are reserved strictly for trading debt securities. b. only exist outside of the United States. C. are called over-the-counter markets.
d.include the American and the Pacific Stock Exchanges. e. list only the securities of the largest firms.
62. Which one of the following statements is correct concerning the NYSE? A. A firm is expected to have a market value for its publicly held shares of at least $100 millionto be listed on the NYSE. b. The NYSE is the largest dealer market for listed securities in the United States. c. The NYSE accounts for only 50 percent of the shares traded in the auction markets. d.Any corporation desiring to be listed on the NYSE can do so. e. The NYSE is an over-the-counter exchange functioning as both a primary and a secondary market.
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Chapter 001 Introduction to Corporate Finance63. Which of the following statements concerning NASDAQ are correct? I. Most smaller firms are listed on NASDAQ rather than on the NYSE. II. NASDAQ is an electronic market.III. NASDAQ is an auction market. IV. NASDAQ is an OTC market.a. I and II only b. I and III only c. II and IV only d.D. I, II, and IV onlye. I, II, III, and IV