Chapter 5: Forms of Business Ownership and Business Combinations
Multiple Choice

1.  

Which of the following is NOT a business structure?
LBO
Corporation
Partnership
Sole proprietorship

2.  

Which of the following is NOT a benefit of owning common stock?
First claim on corporate assets after company debts are paid.
Investment returns if stock is sold at a higher price than when purchased
Profit dividends
Voting privileges on major policies that affect ownership

3.  

Benefits of preferred stock include...
first claim on company assets.
steady income from fixed dividends.
voting rights on major policies.
both "a" and "c."

4.  

Withholding stock from public sale, owners...
can publicly trade company stock.
can avoid the use of bank loans to finance operating costs.
can establish an independent market value for their company.
retain complete control over their operations and ownership.

5.  

In addition to providing a ready supply of capital, public ownership also offers...
enhanced visibility for the company.
established independent market value for the company.
the flexibility to use stock to acquire other firms.
all of the above.

6.  

Which of the following is NOT a disadvantage of public trade of company stock?
Initial IPO costs
Burdensome SEC filing requirements
Company stock value is subjected to external forces beyond company control.
Heavy responsibility of ownership control

7.  

Companies whose stock is not publicly traded are known as:
private corporations.
closed corporations.
closely held companies.
all of the above.

8.  

In addition to individuals, shareholders may also be...
pension funds.
NPOs.
mutual funds.
all of the above.

9.  

An attempt to gain control of a company against the wishes of its existing management is known as a/an...
acquisition.
consolidation.
hostile takeover.
merger.

10.  

Among corporate defense schemes against hostile takeovers, the most company-friendly is...
the golden parachute.
the white knight.
the poison pill
the shark repellent.

11.  

Traditional board members...
work closely with management.
make large commitments of their time.
are CEO-driven.
all of the above.

12.  

The merger of Daimler-Benz and Chrysler involved negotiating...
different cultures.
different management, operational, and decision-making styles.
issues around time zone differences.
all of the above.

13.  

An LLC protects owners from...
unlimited liability.
hostile takeovers.
LBOs.
proxy voting.

14.  

The following are listed in Actium Publishing's Internet Business Start-Ups as important considerations for planning and running an online business-except...
finding the best internet connection and service provider.
planning vertical mergers.
selecting someone to design and maintain your Web site.
deciding whether to join an online mall.

15.  

Which of the following are NOT among Cisco's reasons for preferring acquisition of smaller start-up firms?
Small start-ups are easier to integrate into the corporate culture.
Smaller companies don't require a no-layoffs pledge.
Everyone's function in a small company is clear, thus it is easer to avoid duplication.
Younger companies are usually privately held and flexible.


© 2000-2001 by Prentice-Hall, Inc.
A Pearson Company
Distance Learning at Prentice Hall
Legal Notice