Question 1

Corporate restructuring has been one result of more institutional ownership. Restructuring can cause:

Accepted Answer

A)  stability in the asset and liabilities of the firm. 
B)  the purchase of low-profit margin divisions. 
C)  the promotion of current management and/or large increases in the workforce. 
D)  changes in the asset and liabilities of the firm. 
A)  stability in the asset and liabilities of the firm. 
B)  the purchase of low-profit margin divisions. 
C)  the promotion of current management and/or large increases in the workforce. 
D)  changes in the asset and liabilities of the firm.

Question 2

What are the 4 components of good corporate governance?

Accepted Answer

Good corporate governance results from:

Question 3

Agency theory examines the relationship between companies and their customers.

Accepted Answer

A) True 
 B)False

Question 4

A corporate buy-back, or the repurchasing of shares, is:

Accepted Answer

A)  an example of balance sheet restructuring. 
B)  an excellent source of profits when the firm's stock is over-priced. 
C)  a method of reducing the debt-to-equity ratio. 
D)  shown as revenue on the income statement. 
A)  an example of balance sheet restructuring. 
B)  an excellent source of profits when the firm's stock is over-priced. 
C)  a method of reducing the debt-to-equity ratio. 
D)  shown as revenue on the income statement.

Question 5

The shift to the return side of the risk-return relationship has occurred because:

Accepted Answer

A)  narrow focus on production. 
B)  stock splits. 
C)  there has been a decrease in the use of advanced technology in the production process. 
D)  there has been an increase in international competition. 
A)  narrow focus on production. 
B)  stock splits. 
C)  there has been a decrease in the use of advanced technology in the production process. 
D)  there has been an increase in international competition.

Question 6

There are some serious problems with the financial goal of maximizing the earnings of the firm.

Accepted Answer

A) True 
 B)False

Question 7

The increased percentage of ownership of public corporations by institutional investors has:

Accepted Answer

A)  had no effect on corporate management. 
B)  created higher returns for the stock market in general. 
C)  created less pressure on public companies to manage their firms more efficiently. 
D)  increased the ethical standards of management. 
A)  had no effect on corporate management. 
B)  created higher returns for the stock market in general. 
C)  created less pressure on public companies to manage their firms more efficiently. 
D)  increased the ethical standards of management.

Question 8

Insider trading involves the use of information not available to the general public to make profits from trading in a company's shares.

Accepted Answer

A) True 
 B)False

Question 9

Professors Harry Markowitz and William Sharpe received their Nobel prize in economics for their contributions to the:

Accepted Answer

A)  options pricing model. 
B)  theories of working capital management. 
C)  theories of risk-return and portfolio theory. 
D)  theories of international capital budgeting. 
A)  options pricing model. 
B)  theories of working capital management. 
C)  theories of risk-return and portfolio theory. 
D)  theories of international capital budgeting.

Question 10

Which of the following is not a major area of concern and emphasis in modern financial management and in this text?

Accepted Answer

A)  Inflation and its effect on profits 
B)  Stable short-term interest rates 
C)  Changing international environment 
D)  Increased reliance on debt 
A)  Inflation and its effect on profits 
B)  Stable short-term interest rates 
C)  Changing international environment 
D)  Increased reliance on debt

Question 11

Which of the following is (are) a result of high inflation?

Accepted Answer

A)  Loss from disposal of assets 
B)  Over-valued liabilities 
C)  Lower stock price 
D)  Under-valued assets 
A)  Loss from disposal of assets 
B)  Over-valued liabilities 
C)  Lower stock price 
D)  Under-valued assets

Question 12

Historically the field of finance as a discipline described capital preservation, liquidity, reorganization, and bankruptcy through the 1930s depression.

Accepted Answer

A) True 
 B)False

Question 13

Money markets would include which of the following securities?

Accepted Answer

A)  Common stock and corporate bonds 
B)  Treasury bills and commercial paper 
C)  Certificates of deposit and preferred stock 
D)  Government bonds. 
A)  Common stock and corporate bonds 
B)  Treasury bills and commercial paper 
C)  Certificates of deposit and preferred stock 
D)  Government bonds.

Question 14

List the occasional functions of the finance manager connected to the efficient raising and investing of funds.

Accepted Answer

Intermediate financing, bond i

Question 15

The internationalization of the financial markets has:

Accepted Answer

A)  lowered the cost of capital. 
B)  raised the cost of capital. 
C)  forced companies to value everything in U.S. dollars. 
D)  had no effect on the cost of capital. 
A)  lowered the cost of capital. 
B)  raised the cost of capital. 
C)  forced companies to value everything in U.S. dollars. 
D)  had no effect on the cost of capital.

Question 16

Corporations can reduce portfolio risk by:

Accepted Answer

A)  narrowing their focus on one successful product. 
B)  merging with companies in unrelated industries. 
C)  repurchasing their own stock. 
D)  selling their own stock. 
A)  narrowing their focus on one successful product. 
B)  merging with companies in unrelated industries. 
C)  repurchasing their own stock. 
D)  selling their own stock.

Question 17

Honesty in business requires timely and full disclosure of pertinent firm developments.

Accepted Answer

A) True 
 B)False

Question 18

The formation of a corporation is a way to circumvent personal liability.

Accepted Answer

A) True 
 B)False

Question 19

Some of the effects of high inflation are:

Accepted Answer

A)  the gold standard was eliminated. 
B)  purchasing power increased. 
C)  interest rates fall. 
D)  Phantom profits and undervalued assets. 
A)  the gold standard was eliminated. 
B)  purchasing power increased. 
C)  interest rates fall. 
D)  Phantom profits and undervalued assets.

Question 20

Insider trading occurs when:

Accepted Answer

A)  someone has information not available to the public, which they use to profit from trading in stocks. 
B)  corporate officers buy stock in their company. 
C)  lawyers, investment dealers, and others buy common stock in companies represented by their firms 
D)  stock transactions occur with reduced brokerage fees. 
A)  someone has information not available to the public, which they use to profit from trading in stocks. 
B)  corporate officers buy stock in their company. 
C)  lawyers, investment dealers, and others buy common stock in companies represented by their firms 
D)  stock transactions occur with reduced brokerage fees.

Exam 1: The Goals and Functions of Financial Management

Corporate restructuring has been one result of more institutional ownership. Restructuring can cause:

What are the 4 components of good corporate governance?

Agency theory examines the relationship between companies and their customers.

A corporate buy-back, or the repurchasing of shares, is:

The shift to the return side of the risk-return relationship has occurred because:

There are some serious problems with the financial goal of maximizing the earnings of the firm.

The increased percentage of ownership of public corporations by institutional investors has:

Insider trading involves the use of information not available to the general public to make profits from trading in a company's shares.

Professors Harry Markowitz and William Sharpe received their Nobel prize in economics for their contributions to the:

Which of the following is not a major area of concern and emphasis in modern financial management and in this text?

Which of the following is (are) a result of high inflation?

Historically the field of finance as a discipline described capital preservation, liquidity, reorganization, and bankruptcy through the 1930s depression.

Money markets would include which of the following securities?

List the occasional functions of the finance manager connected to the efficient raising and investing of funds.

The internationalization of the financial markets has:

Corporations can reduce portfolio risk by:

Honesty in business requires timely and full disclosure of pertinent firm developments.

The formation of a corporation is a way to circumvent personal liability.

Some of the effects of high inflation are:

Insider trading occurs when:

Review of Accounting

Financial Analysis

Financial Forecasting

Operating and Financial Leverage

Working Capital and the Financing Decision

Current Asset Management

Sources of Short-Term Financing

The Time Value of Money

Valuation and Rates of Return

Cost of Capital

The Capital Budgeting Decision

Risk and Capital Budgeting

Capital Markets

Investment Underwriting

Long-Term Debt and Lease Financing

Common and Preferred Stock Financing

Dividend Policy and Retained Earnings

Derivative Securities

External Growth Through Mergers

International Financial Management

Filters