How Much You Know About Corporate Finance? Quiz

10 Questions | Total Attempts: 857

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How Much You Know About Corporate Finance? Quiz

How much do you know about corporate finance? Corporate finance is centered on knowing where to get the finances and structure for making investment decisions. Some people might have enough capital but end up making the words investment decisions leading to business failure. Take up this quiz and get to see just how much you know about corporate financing!


Questions and Answers
  • 1. 
    Your friend is concerned that if she organizes her business as a corporation, she will have to share ownership of it with other shareholders and therefore give up control of her business.  What should your friend know?
    • A. 

      She is right

    • B. 

      A corporation can have a single shareholder who owns all of the stock

    • C. 

      A corporation needs to have at least 2,000 shareholders

    • D. 

      Not only will she share ownership of the corporation, but her corporation will be obligated to pay dividends

  • 2. 
    Investors invest in stocks of companies that do not pay dividends because
    • A. 

      They hope to make money when the stock price rises

    • B. 

      Not many companies pay dividends

    • C. 

      Companies that do not pay dividends are almost always more profitable than those that pay dividends

    • D. 

      Actually, every corporation is required by law to pay dividends

  • 3. 
    Which legal form of business is best suited for an expanding business that is likely to need large amounts of funding?
    • A. 

      Sole proprietorship

    • B. 

      General partnership

    • C. 

      Corporation

    • D. 

      All forms are about the same

  • 4. 
    The owners of a corporation can best be described as the ___ of the corporation.
    • A. 

      Directors

    • B. 

      Shareholders

    • C. 

      Officers

    • D. 

      Managers

  • 5. 
    The shareholders elect ___ to protect their interest in a corporation.
    • A. 

      Board of Directors

    • B. 

      The CEO

    • C. 

      The CFO

    • D. 

      The senior managers

  • 6. 
    Which most accurately describes an inside director of a corporation?
    • A. 

      One who has engaged in insider trading

    • B. 

      One who also works inside the SEC

    • C. 

      One who is also an officer of the corporation

    • D. 

      One who is an officer of another corporation

  • 7. 
    A shareholder wishes to sell shares to another investor.  She should know that shares of stock in a corporation.
    • A. 

      Can never be transferred from one investor to another

    • B. 

      Can be freely transferred from one investor another

    • C. 

      Can be transferred to another investor but only if all other existing shareholders agree to the transfer

    • D. 

      Corporations do not have shares of stock, so the question is irrelevant

  • 8. 
    In a typical corporation, for which function(s) is the CFO usually is responsible?
    • A. 

      Accounting

    • B. 

      Finance

    • C. 

      Accounting and Finance

    • D. 

      Accounting, Finance and Legal

  • 9. 
    In a typical large public corporation, who manages the company on a day to day basis?
    • A. 

      Board of directors

    • B. 

      Only the outside directors

    • C. 

      Officers of the corporation

    • D. 

      The shareholders

  • 10. 
    Owners of sole proprietorships are taxed at a rate of 30% on the profits of their businesses.  Corporations are taxed at 21% of their profits.  Dividends are taxed at a rate of 15%.  If a business earns a profit of  $300,000 for the year.  If a business is organized as a corporation and pays out the maximum dividend it can pay, from the year's profits, how much of the dividend is available to the stockholders after all taxes are paid?
    • A. 

      $210,000

    • B. 

      $237,000

    • C. 

      $255,000

    • D. 

      $201,450

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