Question 1

These individuals examine a firm's financial strength for its debt holders.

Accepted Answer

A)  auditors 
B)  investment analysts 
C)  investment bankers 
D)  credit analysts 
A)  auditors 
B)  investment analysts 
C)  investment bankers 
D)  credit analysts D

Question 2

Which of the following personal decisions is NOT impacted by finance?

Accepted Answer

A)  borrowing money to purchase cars or homes 
B)  making credit card payments 
C)  making retirement decisions 
D)  all of these choices are correct. 
A)  borrowing money to purchase cars or homes 
B)  making credit card payments 
C)  making retirement decisions 
D)  all of these choices are correct. D

Question 3

The overall goal of the financial manager is to

Accepted Answer

A)  minimize total costs. 
B)  maximize net income. 
C)  maximize earnings per share. 
D)  maximize shareholder wealth. 
A)  minimize total costs. 
B)  maximize net income. 
C)  maximize earnings per share. 
D)  maximize shareholder wealth. D

Question 4

Which of these are NOT basic approaches to minimizing the agency problem?

Accepted Answer

A)  ignore the conflict of interest 
B)  monitor managers' actions 
C)  align managers' personal interest with those of the owners by making the managers owners 
D)  all of these choices are correct. 
A)  ignore the conflict of interest 
B)  monitor managers' actions 
C)  align managers' personal interest with those of the owners by making the managers owners 
D)  all of these choices are correct.

Question 5

According to an updated rule by the U.S. Securities Exchange Commission in 2017:

Accepted Answer

A)  Publicly traded companies are to release a ratio of CEO earnings compared to median pay for workers. 
B)  The median ratio of CEO-to-median-worker-salary for the 100 largest companies is to be 235-to-one. 
C)  A and B are true. 
D)  None of the above are true. 
A)  Publicly traded companies are to release a ratio of CEO earnings compared to median pay for workers. 
B)  The median ratio of CEO-to-median-worker-salary for the 100 largest companies is to be 235-to-one. 
C)  A and B are true. 
D)  None of the above are true.

Question 6

What is the difference in perspective between finance and accounting?

Accepted Answer

A)  timing 
B)  risk 
C)  liability 
D)  ownership 
A)  timing 
B)  risk 
C)  liability 
D)  ownership

Question 7

Not all cash a company generates will be returned to the investors. Which of the following will NOT reduce the amount of capital returned to the investors?

Accepted Answer

A)  retained earnings 
B)  taxes 
C)  dividends 
A)  retained earnings 
B)  taxes 
C)  dividends

Question 8

This is the set of laws, policies, incentives, and monitors designed to handle the issues arising from the separation of ownership and control.

Accepted Answer

A)  agency theory 
B)  corporate governance 
C)  defined benefit plan 
D)  invisible hand 
A)  agency theory 
B)  corporate governance 
C)  defined benefit plan 
D)  invisible hand

Question 9

Which of the following do not ensure firm viability over the long run?

Accepted Answer

A)  maximizing employment 
B)  market share 
C)  profits 
D)  all of these choices are correct. 
A)  maximizing employment 
B)  market share 
C)  profits 
D)  all of these choices are correct.

Question 10

Which of these must effectively distribute capital between investors and companies?

Accepted Answer

A)  individuals 
B)  international investors 
C)  companies 
D)  financial institutions 
A)  individuals 
B)  international investors 
C)  companies 
D)  financial institutions

Question 11

According to the new Tax Cuts and Jobs Act (TCJA) of 2017, which of the following statements are true?

Accepted Answer

A)  Changes in tax law can lead to making different financial decisions. 
B)  The new law reduces the amount of debt interest that can be deducted. 
C)  Companies may wish to use more equity financing and less debt financing. 
D)  All of the above. 
A)  Changes in tax law can lead to making different financial decisions. 
B)  The new law reduces the amount of debt interest that can be deducted. 
C)  Companies may wish to use more equity financing and less debt financing. 
D)  All of the above.

Question 12

The biggest disadvantage of the sole proprietorship is

Accepted Answer

A)  unlimited liability. 
B)  double taxation. 
C)  limited access to capital. 
D)  total control. 
A)  unlimited liability. 
B)  double taxation. 
C)  limited access to capital. 
D)  total control.

Question 13

A metaphor used to illustrate how an individual pursuing his own interests also tends to promote the good of the community.

Accepted Answer

A)  agency theory 
B)  angel investor 
C)  invisible hand 
D)  perks or perquisites 
A)  agency theory 
B)  angel investor 
C)  invisible hand 
D)  perks or perquisites

Question 14

Outside parties that monitor the firm include all of the following EXCEPT

Accepted Answer

A)  credit agencies. 
B)  the New York Stock Exchange. 
C)  analysts. 
D)  bankers. 
A)  credit agencies. 
B)  the New York Stock Exchange. 
C)  analysts. 
D)  bankers.

Question 15

The most commonly accepted groups of asset classes include all of the following except

Accepted Answer

A)  stocks. 
B)  bonds. 
C)  machinery and equipment. 
D)  real estate. 
A)  stocks. 
B)  bonds. 
C)  machinery and equipment. 
D)  real estate.

Question 16

Methods to minimize agency problem include all EXCEPT

Accepted Answer

A)  offer the managers an equity stake in the firm. 
B)  award the CEO stock options. 
C)  allow the CEO to purchase stock via an employee stock option plan. 
D)  allow the CEO to purchase bonds via an employee bond option plan. 
A)  offer the managers an equity stake in the firm. 
B)  award the CEO stock options. 
C)  allow the CEO to purchase stock via an employee stock option plan. 
D)  allow the CEO to purchase bonds via an employee bond option plan.

Question 17

In order for an angel investor or venture capitalist to exchange capital for ownership in a business that is a sole proprietorship, which of these must happen?

Accepted Answer

A)  The business must be re-formed as a partnership. 
B)  The owner must give up some control. 
C)  The owner must co sign on all loans. 
D)  The business must be re-formed as a partnership and the owner must give up some control. 
A)  The business must be re-formed as a partnership. 
B)  The owner must give up some control. 
C)  The owner must co sign on all loans. 
D)  The business must be re-formed as a partnership and the owner must give up some control.

Question 18

Which statements(s) is/are true for successful application of financial theories?

Accepted Answer

A)  The economy will be more productive. 
B)  Individual's wealth will grow. 
C)  A and B are true. 
D)  None of the above. 
A)  The economy will be more productive. 
B)  Individual's wealth will grow. 
C)  A and B are true. 
D)  None of the above.

Question 19

Which of the following is a legal duty between two parties where one party must act in the interest of the other party?

Accepted Answer

A)  agency theory 
B)  angel investor 
C)  fiduciary 
D)  investment banker 
A)  agency theory 
B)  angel investor 
C)  fiduciary 
D)  investment banker

Question 20

These individuals follow a firm, conduct their own evaluations of the company's business activities, and report to the investment community.

Accepted Answer

A)  auditors 
B)  investment analysts 
C)  investment bankers 
D)  credit analysts 
A)  auditors 
B)  investment analysts 
C)  investment bankers 
D)  credit analysts

These individuals examine a firm's financial strength for its debt holders.

Which of the following personal decisions is NOT impacted by finance?

The overall goal of the financial manager is to

Which of these are NOT basic approaches to minimizing the agency problem?

According to an updated rule by the U.S. Securities Exchange Commission in 2017:

What is the difference in perspective between finance and accounting?

Not all cash a company generates will be returned to the investors. Which of the following will NOT reduce the amount of capital returned to the investors?

This is the set of laws, policies, incentives, and monitors designed to handle the issues arising from the separation of ownership and control.

Which of the following do not ensure firm viability over the long run?

Which of these must effectively distribute capital between investors and companies?

According to the new Tax Cuts and Jobs Act (TCJA) of 2017, which of the following statements are true?

The biggest disadvantage of the sole proprietorship is

A metaphor used to illustrate how an individual pursuing his own interests also tends to promote the good of the community.

Outside parties that monitor the firm include all of the following EXCEPT

The most commonly accepted groups of asset classes include all of the following except

Methods to minimize agency problem include all EXCEPT

In order for an angel investor or venture capitalist to exchange capital for ownership in a business that is a sole proprietorship, which of these must happen?

Which statements(s) is/are true for successful application of financial theories?

Which of the following is a legal duty between two parties where one party must act in the interest of the other party?

These individuals follow a firm, conduct their own evaluations of the company's business activities, and report to the investment community.

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money 1: Analyzing Single Cash Flows

Time Value of Money 2: Analyzing Annuity Cash Flows

Understanding Financial Markets and Institutions

Valuing Bonds

Valuing Stocks

Characterizing Risk and Return

Estimating Risk and Return

Calculating the Cost of Capital

Estimating Cash Flows on Capital Budgeting Projects

Weighing Net Present Value and Other Capital Budgeting Criteria

Working Capital Management and Policies

Financial Planning and Forecasting

Assessing Long-Term Debt, Equity, and Capital Structure

Sharing Firm Wealth: Dividends, Share Repurchases, and Other Payouts

Issuing Capital and the Investment Banking Process

International Corporate Finance

Mergers and Acquisitions and Financial Distress

Filters

Exam 1: Introduction to Financial Management

These individuals examine a firm's financial strength for its debt holders.

Which of the following personal decisions is NOT impacted by finance?

The overall goal of the financial manager is to

Which of these are NOT basic approaches to minimizing the agency problem?

According to an updated rule by the U.S. Securities Exchange Commission in 2017:

What is the difference in perspective between finance and accounting?

Not all cash a company generates will be returned to the investors. Which of the following will NOT reduce the amount of capital returned to the investors?

This is the set of laws, policies, incentives, and monitors designed to handle the issues arising from the separation of ownership and control.

Which of the following do not ensure firm viability over the long run?

Which of these must effectively distribute capital between investors and companies?

According to the new Tax Cuts and Jobs Act (TCJA) of 2017, which of the following statements are true?

The biggest disadvantage of the sole proprietorship is

A metaphor used to illustrate how an individual pursuing his own interests also tends to promote the good of the community.

Outside parties that monitor the firm include all of the following EXCEPT

The most commonly accepted groups of asset classes include all of the following except

Methods to minimize agency problem include all EXCEPT

In order for an angel investor or venture capitalist to exchange capital for ownership in a business that is a sole proprietorship, which of these must happen?

Which statements(s) is/are true for successful application of financial theories?

Which of the following is a legal duty between two parties where one party must act in the interest of the other party?

These individuals follow a firm, conduct their own evaluations of the company's business activities, and report to the investment community.

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money 1: Analyzing Single Cash Flows

Time Value of Money 2: Analyzing Annuity Cash Flows

Understanding Financial Markets and Institutions

Valuing Bonds

Valuing Stocks

Characterizing Risk and Return

Estimating Risk and Return

Calculating the Cost of Capital

Estimating Cash Flows on Capital Budgeting Projects

Weighing Net Present Value and Other Capital Budgeting Criteria

Working Capital Management and Policies

Financial Planning and Forecasting

Assessing Long-Term Debt, Equity, and Capital Structure

Sharing Firm Wealth: Dividends, Share Repurchases, and Other Payouts

Issuing Capital and the Investment Banking Process

International Corporate Finance

Mergers and Acquisitions and Financial Distress

Filters