When defining the fix of the firm’s equity and debt financing, which one of the

Question

When defining the fix of the firm’s equity and debt financing, which one of the following terms applies?

Select one:

a. Working capital management

b. Cash management

c. Cost analysis

d. Capital budgeting

e. Capital structure

If a business is owned by a single individual and this individual maintains unlimited liability for all company debt, the business structure is known as a

Select one:

a. Corporation

b. Sole Proprietorship

c. General Partnership

d. Limited Partnership

e. Limited Liability Company

A conflict between the managers of a corporation and the shareholders of that same corporation is known as a

Select one:

a. Articles of incorporation

b. Corporate breakdown

c. Agency problem

d. Bylaws

e. Legal liability

Explanation / Answer

Question - 1 .......... (e) Capital structure

Capital structure implies the combination of debt and equity maintained in the total capital of the firm. So fix of firms equity and firms debt is refered to as Capitals structure.

Question - 2 ........ (b) sole proprietorship

In sole proprietorship style of business organisation, owner of the business assumes unlimited liability, such that his business assets as well as personal assets shall be liable to all the debts entered into in course of business transactions.

Question - 3 .......... (c) Agency problem.

Agency problem refers to conflict of interests between agents ( managers) and the principle ( share holder). It implies, managers most of the times prefers to avoid decisons on the ground of taking unnessary risk from their own point of view, ignoring the interests of the shareholders.

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