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37. Individuals who provide small amounts of capital and expert business advice to small
firms in exchange for an ownership stake in the firm are referred to as:
38. The opportunity to buy stock at a fixed price over a specific period of time is referred to
as:
39. The portion of a company's profits that are kept by the company rather than distributed
to the stockholders as cash dividends is referred to as:
40. An employee stock option plan is:
41. Outside parties that monitor the firm include all of the following EXCEPT:
42. Which of the following is NOT a function of the board of directors?
43. The overall goal of the financial manager is to:
44. Maximizing owners' equity value means carefully considering all of the following
EXCEPT:
45. The agency relationship in corporate finance refers to:
46. The most common type of business in the United States is the:
47. The biggest disadvantage of the sole proprietorship is:
48. Which of the following statements is incorrect?
49. All of the following are advantages to organizing as a corporation EXCEPT:
50. Which of the following statements is correct?
51. From a taxation perspective, the form of business organization with the highest business
level taxes is the:
52. From the perspective of access to capital, the best form of business organization is the:
53. From the perspective of ownership risk, the best form of business organization is the:
54. From the perspective of control, the best form of business organization is the:
55. Which of the following statements is incorrect?
56. Which statement is incorrect regarding hybrid organizations?
57. Agency problems exist in which forms of business ownership?
58. Methods to minimize agency problem include all EXCEPT:
59. All of the following are an example of a fiduciary relationship EXCEPT:
60. Restricted stock is:
61. The board of directors:
62. Which of these does NOT act as a monitor of how the firm is being run outside the firm?
63. An angel investor differs from a venture capitalist because of the:
64. Corporate stakeholders include all of the following EXCEPT:
65. What is the difference in perspective between finance and accounting?
66. Which of the following statements is correct?
67. One approach to aligning managers' personal interest with those of the owners is to
make the managers owners. List the avenues that a firm could use to offer managers an equity
stake in the firm.
Corporations may take the following approaches:
68. How do financial institutions impact business firms?
69. Explain three ways the fallout from the financial crisis is going to affect you, the student,
in the years and decades to come.
70. Explain Adam Smith's argument regarding the invisible hand of the market.
71. Explain what started the financial crisis that started in 2006 and why it escalated on such
a widespread scale.
