1. | Question: | (TCO 1) The money markets deal with | | Your Answer: | | | short-term securities | | CORRECT | | | securities with a life of more than one year | | | | | securities such as common stock | | | | | none of the above | | | | | Instructor Explanation: | Chapter 1, Page 15 | | Points Received: | 2 of 2 | 2. | Question: | (TCO 1) One major disadvantage of the sole proprietorship is | | Your Answer: | | | simplicity of decision-making | | INCORRECT | | | unlimited liability | | CORRECT ANSWER | | | low operational costs | | | | | none of the above | | | | | Instructor Explanation: | Chapter 1, Page 8 | | Points Received: | 0 of 2 | 3. | Question: | (TCO 1) The appropriate firm goal in a capitalist society is | | Your Answer: | | | profit maximization | | | | | shareholder wealth maximization | | CORRECT | | | social responsibility | | | | | none of the above | | | | | Instructor Explanation: | Chapter 1, Page 12 | | Points Received: | 2 of 2 | 4. | Question: | (TCO 1) The agency problem will occur in a business firm if the goal of ____________ and shareholders do not agree. | | Your Answer: | | | investors | | | | | the public | | | | | management | | CORRECT | | | none of the above. | | | | | Instructor Explanation: | Chapter 1, Page 10 | | Points Received: | 2 of 2 | 5. | Question: | (TCO 1) A corporation is | | Your Answer: | | | owned by stockholders who enjoy the privilege of limited liability. | | | | | easily divisible between owners. | | | | | a separate legal entity with