QUESTION 1 A stakeholder is: someone geographically close to the firm\'s headqua

Question

QUESTION 1

A stakeholder is:

someone geographically close to the firm's headquarters.

someone who has a claim on the cash flows of the firm.

some government agency.

all of the above.

2.5 points   

QUESTION 2

Which of the following owners is protected by limited liability?

A sole proprietor

A general partner

Owner of a corporation

None of the above

2.5 points   

QUESTION 3

Which of the following reports directly to the owners of a firm? (Assume that the firm is a public corporation.)

CFO

CEO

Board of directors

Audit committee

2.5 points   

QUESTION 4

How is a CPA firm insulated from being pressurized by management?

The audit committee approves hiring, firing, and paying fees to external auditors.

The chairman of the board approves the external auditor's fees as well as the engagement letter.

The IRS approves the external auditor's fees as well as the engagement letter.

The CPA firm is not insulated from management.

2.5 points   

QUESTION 5

What is the major complaint concerning the Sarbanes-Oxley Act of 2002 by firms?

The legislative maximum allowable compensation for a CEO.

The legal requirement to disclose project information.

The cost of compliance.

The cost of maintaining an SEC employed officer at the firm's premises.

2.5 points   

QUESTION 6

Financial markets and financial institutions are both part of:

the U.S. Treasury.

the financial system.

the SEC.

none of the above.

2.5 points   

QUESTION 7

Which of the following is a major participant in the direct financial market?

Large corporations.

Wealthy individuals.

Investment banks.

All of the above.

2.5 points   

QUESTION 8

The financial market where a new security is sold for the first time is:

a primary market.

a secondary market.

an indirect financial market.

none of the above.

2.5 points   

QUESTION 9

Which of the following theories states that security prices reflect all information, whether public or private?

Weak-form efficiency.

Semistrong-form efficiency.

Strong-form efficiency.

Nominal-form efficiency.

2.5 points   

QUESTION 10

If your firm primarily borrows from commercial banks, then it primarily accesses the capital markets through:

direct financing.

indirect financing.

a legal loophole that allows all commercial banks the ability to underwrite securities.

none of the above.

someone geographically close to the firm's headquarters.

someone who has a claim on the cash flows of the firm.

some government agency.

all of the above.

Explanation / Answer

1 The stakeholders are the individuals who have the claims over the cash flows. Hence, the correct option is B. someone who has a claim on the cash flows of the firm. 2 The limited partner is protected by the limited liability. The correct option is D. None of the above 3 Board of Directors reports directly to the owner The correct option is C. Board of directors 4 The correct option is A. The audit committee approves hiring, firing, and paying fees to external auditors.

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