Go over the problems below, provide an answer, bring your questions to class. (A list of answers is provided on the last page, for you to check your work once you are finished.)
Exam #1
Multiple Choice
The following questions are worth 3 points each. Provide the single best response.
____ 1. Which of the following statements is most correct?
a.
One of the advantages of the corporate form of organization is that there is no double taxation.
b.
The partnership form of organization has easy transferability of ownership.
c.
One of the disadvantages of the sole proprietorship form of organization is that there is unlimited liability.
d.
Statements b and c are correct.
e.
None of the statements above is correct.
____ 2. Which of the following statements is most correct?
a.
One advantage of forming a corporation is that you have limited liability.
b.
Corporations face fewer regulations than sole proprietorships.
c.
One disadvantage of being a sole proprietor is that you have to pay corporate taxes, even though you don't realize the benefits of being a corporation.
d.
Statements b and c are correct.
e.
None of the statements above is correct.
____ 3. Which of the following could explain why a business might choose to organize as a corporation rather than as a sole proprietorship or a partnership?
a.
Corporations generally face fewer regulations.
b.
Corporations generally face lower taxes.
c.
Corporations generally find it easier to raise capital.
d.
Corporations enjoy unlimited liability.
e.
Statements c and d are correct.
____ 4. The primary goal of a publicly-owned firm interested in serving its stockholders should be to
a.
Maximize expected total corporate profit.
b.
Maximize expected EPS.
c.
Minimize the chances of losses.
d.
Maximize the stock price per share.
e.
Maximize expected net income.
____ 5. Which of the following statements is most correct?
a.
A good goal for a corporate manager is...