公司金融finl模拟题和答案.doc

Final Practice for the course Goal of firm Answer: d MEDIUM . The primary operating goal of a publicly-owned firm interested in serving its stockholders should be to a. Maximize its expected total corporate income. b. Maximize its expected EPS. c. Minimize the chances of losses. d. Maximize the stock price per share over the long run, which is the stock’s intrinsic value. e. Maximize the stock price on a specific target date. Firm organization Answer: c EASY . Which of the following statements is CORRECT? a. One of the advantages of the corporate form of organization is that it avoids double taxation. b. It is easier to transfer one’s ownership interest in a partnership than in a corporation. c. One of the disadvantages of a sole proprietorship is that the proprietor is exposed to unlimited liability. d. One of the advantages of a corporation from a social standpoint is that every stockholder has equal voting rights, i.e., “one person, one vote.” e. Corporations of all types are subject to the corporate income tax. Dividends, retained earnings Answer: b EASY/MEDIUM . Fine Breads Inc. paid out $26,000 common dividends during 2005, and it ended the year with $150,000 of retained earnings. The prior year’s retained earnings were $145,000. What was the firms 2005 net income? a. $30,000 b. $31,000 c. $32,000 d. $33,000 e. $34,000 Statement of cash flows Answer: d MEDIUM . Which of the following statements is CORRECT? a. In the statement of cash flows, depreciation charges are reported as a use of cash. b. In the statement of cash flows, a decrease in accounts receivable is reported as a use of cash. c. In the statement of cash flows, a decrease in inventories is reported as a use of cash. d. In the statement of cash flows, a decrease in accounts payable is reported as a use of cash. e. Dividends do not show up in the statement of cash flows because dividends are considered to be a financing activity, not an operating activity. Effect of reducing costs on ROE Ans