41. The owners of a limited liability company prefer: a. being taxed like a corporation. b. having liability exposure similar to that of a sole proprietor.C. being taxed personally on all business income. d.having liability exposure similar to that of a general partner. e. being taxed like a corporation with liability like a partnership. 1-14 Chapter 001 Introduction to Corporate Finance 42. Which one of the following business types is best suited to raising large amounts of capital? a. sole proprietorship b. limited liability companyC. corporation d.general partnership e. limited partnership 43. Which type of business organization has all the respective rights and privileges of a legal person? a. sole proprietorship b. general partnership c. limited partnershipD. corporation e. limited liability company 44. The primary goal of financial management is to: a. maximize current dividends per share of the existing stock.B. maximize the current value per share of the existing stock. c. avoid financial distress. d.minimize operational costs and maximize firm efficiency. e. maintain steady growth in both sales and net earnings. 1-15 Chapter 001 Introduction to Corporate Finance 45. Financial managers should strive to maximize the current value per share of the existing stock because: a. doing so guarantees the company will grow in size at the maximum possible rate. b. doing so increases the salaries of all the employees. C. they have been hired for the purpose of representing the interest of the current shareholders. d.doing so means the firm is growing in size faster than its competitors. e. the managers often receive shares of stock as part of their compensation. 46. The decisions made by financial managers should all be ones which increase the: a. size of the firm. b. growth rate of the firm. c. marketability of the managers. D. market value of the existing owners’ equity.e. financial distress of the firm. 47. The Sarbanes-Oxley Act of 2002 is a governmental response to: a. increased federal taxes. b. the terrorists attacks on 9/11/2001. c. decreasing corporate dividend payments. d.new stock trading regulations by the stock exchanges.E. corporate scandals. 1-16 Chapter 001 Introduction to Corporate Finance 48. The Sarbanes-Oxley Act of 2002: a. imposed insignificant compliance costs on smaller corporations.B. caused some firms to “go dark”. c. increases the ability of corporate officers to borrow money from their employer. d.required that the smaller firms on the NYSE be delisted. e. protects the management of a firm from the firm’s shareholders. 49. A firm which opts to “go dark” in response to the Sarbanes-Oxley Act: a. must continue to provide audited financial statements which have been signed by the corporate officers. b. must continue to provide a detailed list of internal control deficiencies on an annual basis.C. can and mostly likely will provide less information to its shareholders than it did prior tothe act. d.can continue trading their stock on the stock exchanges. e. will rarely experience any resulting change in the price of their stock. 50. Which one of the following actions by a financial manager creates an agency problem? a. refusing to borrow money when doing so will create losses for the firm b. refusing to lower selling prices if doing so will reduce the net profitsC. agreeing to expand the company at the expense of stockholders’ value d.agreeing to pay bonuses based on the market value of the company stock e. increasing current costs in order to increase the market value of the stockholders’ equity
