Question 1

In the mid 1950s, finance began to change to a more analytical, decision oriented approach.

Accepted Answer

A) True 
 B)False

Question 2

A corporation is not:

Accepted Answer

A)  owned by shareholders who enjoy the privilege of limited liability. 
B)  easily divisible between owners. 
C)  a separate legal entity with perpetual life. 
D)  a separate legal entity with limited life. 
A)  owned by shareholders who enjoy the privilege of limited liability. 
B)  easily divisible between owners. 
C)  a separate legal entity with perpetual life. 
D)  a separate legal entity with limited life.

Question 3

What is the primary goal of financial management?

Accepted Answer

A)  Increased earnings 
B)  Maximizing cash flow 
C)  Maximizing shareholder wealth 
D)  Minimizing risk of the firm 
A)  Increased earnings 
B)  Maximizing cash flow 
C)  Maximizing shareholder wealth 
D)  Minimizing risk of the firm

Question 4

The higher the profit of a firm, the higher the value the firm is assured of receiving in the market.

Accepted Answer

A) True 
 B)False

Question 5

In the past, the study of finance has included:

Accepted Answer

A)  operational efficiency. 
B)  employee relationships. 
C)  legal cases. 
D)  mergers and acquisitions. 
A)  operational efficiency. 
B)  employee relationships. 
C)  legal cases. 
D)  mergers and acquisitions.

Question 6

The partnership form of organization:

Accepted Answer

A)  avoids the double taxation of earnings and dividends found in the corporate form of organization. 
B)  usually provides limited liability to the partners. 
C)  has unlimited life. 
D)  simplifies decision making. 
A)  avoids the double taxation of earnings and dividends found in the corporate form of organization. 
B)  usually provides limited liability to the partners. 
C)  has unlimited life. 
D)  simplifies decision making.

Question 7

Besides maximizing shareholder wealth, what should corporations consider to be goals? List and briefly explain.

Accepted Answer

Corporations, which receive their operat

Question 8

The largest Canadian corporations are mainly:

Accepted Answer

A)  widely held. 
B)  family controlled. 
C)  U.S. controlled. 
D)  Japanese controlled. 
A)  widely held. 
B)  family controlled. 
C)  U.S. controlled. 
D)  Japanese controlled.

Question 9

The increase in the internationalization of financial markets has led:

Accepted Answer

A)  to companies searching the global financial markets for high cost funds. 
B)  to a decrease in Canadian companies listing on the New York Stock Exchange. 
C)  to a decrease in debt obligations denominated in foreign currency on Canadian corporate balance sheets. 
D)  to the tasks of the financial manager being reshaped. 
A)  to companies searching the global financial markets for high cost funds. 
B)  to a decrease in Canadian companies listing on the New York Stock Exchange. 
C)  to a decrease in debt obligations denominated in foreign currency on Canadian corporate balance sheets. 
D)  to the tasks of the financial manager being reshaped.

Question 10

The internationalization of the financial markets has:

Accepted Answer

A)  allowed firms such as Bombardier to raise capital around the world. 
B)  raised the cost of capital. 
C)  forced companies to value everything in U.S. dollars. 
D)  created ASPE. 
A)  allowed firms such as Bombardier to raise capital around the world. 
B)  raised the cost of capital. 
C)  forced companies to value everything in U.S. dollars. 
D)  created ASPE.

Question 11

Inflation is assumed to be a temporary problem that does not affect financial decisions.

Accepted Answer

A) True 
 B)False

Question 12

The primary market includes the sale of securities by way of initial public offerings.

Accepted Answer

A) True 
 B)False

Question 13

The secondary market characteristically has had stable prices over the past 20 years.

Accepted Answer

A) True 
 B)False

Question 14

Dividends paid to corporate shareholders have already been taxed once as corporate income.

Accepted Answer

A) True 
 B)False

Question 15

There is unlimited liability in a general partnership.

Accepted Answer

A) True 
 B)False

Question 16

What are the characteristics of a partnership? What are the advantages compared to a sole proprietorship?

Accepted Answer

A partnership is characterized by
• Mult

Question 17

In the 1930s, financial practices didn't focus on:

Accepted Answer

A)  maintenance of liquidity. 
B)  reorganization of financially distressed companies. 
C)  the bankruptcy process. 
D)  international exchange costs. 
A)  maintenance of liquidity. 
B)  reorganization of financially distressed companies. 
C)  the bankruptcy process. 
D)  international exchange costs.

Question 18

The sole proprietorship represents single-person ownership and offers the advantages of simplicity of decision making and low organizational and operating costs.

Accepted Answer

A) True 
 B)False

Question 19

Agency theory deals with the issue of:

Accepted Answer

A)  when to hire an agent to represent the firm in negotiations. 
B)  the legal liabilities of a firm if an employee, acting as the firm's agent, injures someone. 
C)  the limitations placed on an employee acting as the firm's agent to obligate or bind the firm. 
D)  the conflicts that can arise between the viewpoints and motivations of a firm's owners and managers. 
A)  when to hire an agent to represent the firm in negotiations. 
B)  the legal liabilities of a firm if an employee, acting as the firm's agent, injures someone. 
C)  the limitations placed on an employee acting as the firm's agent to obligate or bind the firm. 
D)  the conflicts that can arise between the viewpoints and motivations of a firm's owners and managers.

Question 20

Agency theory assumes that corporate managers act to increase the wealth of corporate shareholders.

Accepted Answer

A) True 
 B)False

Exam 1: The Goals and Functions of Financial Management

In the mid 1950s, finance began to change to a more analytical, decision oriented approach.

A corporation is not:

What is the primary goal of financial management?

The higher the profit of a firm, the higher the value the firm is assured of receiving in the market.

In the past, the study of finance has included:

The partnership form of organization:

Besides maximizing shareholder wealth, what should corporations consider to be goals? List and briefly explain.

The largest Canadian corporations are mainly:

The increase in the internationalization of financial markets has led:

The internationalization of the financial markets has:

Inflation is assumed to be a temporary problem that does not affect financial decisions.

The primary market includes the sale of securities by way of initial public offerings.

The secondary market characteristically has had stable prices over the past 20 years.

Dividends paid to corporate shareholders have already been taxed once as corporate income.

There is unlimited liability in a general partnership.

What are the characteristics of a partnership? What are the advantages compared to a sole proprietorship?

In the 1930s, financial practices didn't focus on:

The sole proprietorship represents single-person ownership and offers the advantages of simplicity of decision making and low organizational and operating costs.

Agency theory deals with the issue of:

Agency theory assumes that corporate managers act to increase the wealth of corporate shareholders.

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