Question 1

In 2006, a significant indicator of the U.S. economic decline was:

Accepted Answer

A)  a significant drop in interest rates 
B)  a sharp increase in unregulated Ponzi-type security sales 
C)  rising defaults by subprime mortgage borrowers 
D)  a large increase in loan default due to unemployment 
A)  a significant drop in interest rates 
B)  a sharp increase in unregulated Ponzi-type security sales 
C)  rising defaults by subprime mortgage borrowers 
D)  a large increase in loan default due to unemployment

Question 2

Explain what started the financial crisis of 2006 and why it escalated on a such a widespread scale.

Accepted Answer

Homes price dropped substantially and ho

Question 3

When determining a form of business organization, all of the following are considered EXCEPT:

Accepted Answer

A)  Who owns the firm. 
B)  What are the owners' risks. 
C)  What are the tax ramifications. 
D)  The physical location of the business. 
A)  Who owns the firm. 
B)  What are the owners' risks. 
C)  What are the tax ramifications. 
D)  The physical location of the business.

Question 4

This type of business organization is legally independent entirely from its owners.

Accepted Answer

A)  Sole proprietorship 
B)  Partnership 
C)  Public Corporations 
D)  Hybrid organizations 
A)  Sole proprietorship 
B)  Partnership 
C)  Public Corporations 
D)  Hybrid organizations

Question 5

This subarea of finance involves methods and techniques to make appropriate decisions about what kinds of securities to own, which firms' securities to buy, and how to be paid back in the form that the investor wishes.

Accepted Answer

A)  real markets 
B)  investments 
C)  financial management 
D)  none of these 
A)  real markets 
B)  investments 
C)  financial management 
D)  none of these

Question 6

Which of the following is an example of aligning managers' personal interests with those of the owners?

Accepted Answer

A)  Allow the managers to have as many perks as they request. 
B)  Pay the managers high salaries. 
C)  Offer the managers an equity stake in the firm. 
D)  Trust the managers' actions as they will always act in the owners' best interest. 
A)  Allow the managers to have as many perks as they request. 
B)  Pay the managers high salaries. 
C)  Offer the managers an equity stake in the firm. 
D)  Trust the managers' actions as they will always act in the owners' best interest.

Question 7

The most common type of business in the United States is the __________.

Accepted Answer

A)  Corporation 
B)  Partnership 
C)  Sole Proprietorship 
D)  Hybrid organization such as a limited liability company 
A)  Corporation 
B)  Partnership 
C)  Sole Proprietorship 
D)  Hybrid organization such as a limited liability company

Question 8

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 9

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

Question 10

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

Question 11

Which of the following statements is correct?

Accepted Answer

A)  Sole proprietorships are easy to start. 
B)  If the sole proprietorship gets sued, the owner is not liable. 
C)  It is relatively easy for sole proprietorships to raise money. 
D)  Profits from the sole proprietorship are subject to double taxation. 
A)  Sole proprietorships are easy to start. 
B)  If the sole proprietorship gets sued, the owner is not liable. 
C)  It is relatively easy for sole proprietorships to raise money. 
D)  Profits from the sole proprietorship are subject to double taxation.

Question 12

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

Question 13

These individuals examine the firm's accounting systems and comment on whether financial statements fairly represent the firm's financial position.

Accepted Answer

A)  Accounting departments 
B)  Chief Financial Officers 
C)  Board of Directors 
D)  Auditors 
A)  Accounting departments 
B)  Chief Financial Officers 
C)  Board of Directors 
D)  Auditors

Question 14

This type of business organization is relatively easy to start, and it is subject to much lighter regulatory and paperwork burden than other business forms.

Accepted Answer

A)  Sole proprietorship 
B)  Partnership 
C)  Corporation 
D)  Hybrid organization 
A)  Sole proprietorship 
B)  Partnership 
C)  Corporation 
D)  Hybrid organization

Question 15

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 16

All of the following are functions of the board of directors except ________.

Accepted Answer

A)  Hire the CEO 
B)  Evaluate the CEO 
C)  Design compensation contracts for the CEO 
D)  Provide reports to the auditors 
A)  Hire the CEO 
B)  Evaluate the CEO 
C)  Design compensation contracts for the CEO 
D)  Provide reports to the auditors

Question 17

This subarea of finance helps facilitate the capital flows between investors and companies.

Accepted Answer

A)  investments 
B)  financial management 
C)  treasury management 
D)  financial institutions and markets 
A)  investments 
B)  financial management 
C)  treasury management 
D)  financial institutions and markets

Question 18

Which of the following is the firm's highest-level financial manager?

Accepted Answer

A)  Chief Executive Officer 
B)  Chief Financial Officer 
C)  Board of Directors 
D)  Corporate Governance 
A)  Chief Executive Officer 
B)  Chief Financial Officer 
C)  Board of Directors 
D)  Corporate Governance

Question 19

This is a general term for securities like stocks, bonds, and other assets that represent ownership in a cash flow.

Accepted Answer

A)  investment 
B)  financial asset 
C)  real asset 
D)  financial markets 
A)  investment 
B)  financial asset 
C)  real asset 
D)  financial markets

Question 20

An employee stock option plan is ________________.

Accepted Answer

A)  A perk usually only given to the board of directors as compensation 
B)  A plan that only partnerships can use to defer compensation to partners 
C)  A way to align the interests of employees with those of the owners 
D)  None of these answers are correct. 
A)  A perk usually only given to the board of directors as compensation 
B)  A plan that only partnerships can use to defer compensation to partners 
C)  A way to align the interests of employees with those of the owners 
D)  None of these answers are correct.

In 2006, a significant indicator of the U.S. economic decline was:

Explain what started the financial crisis of 2006 and why it escalated on a such a widespread scale.

When determining a form of business organization, all of the following are considered EXCEPT:

This type of business organization is legally independent entirely from its owners.

This subarea of finance involves methods and techniques to make appropriate decisions about what kinds of securities to own, which firms' securities to buy, and how to be paid back in the form that the investor wishes.

Which of the following is an example of aligning managers' personal interests with those of the owners?

The most common type of business in the United States is the __________.

The biggest disadvantage of the sole proprietorship is _________________.

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

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

Which of the following statements is correct?

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

These individuals examine the firm's accounting systems and comment on whether financial statements fairly represent the firm's financial position.

This type of business organization is relatively easy to start, and it is subject to much lighter regulatory and paperwork burden than other business forms.

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

All of the following are functions of the board of directors except ________.

This subarea of finance helps facilitate the capital flows between investors and companies.

Which of the following is the firm's highest-level financial manager?

This is a general term for securities like stocks, bonds, and other assets that represent ownership in a cash flow.

An employee stock option plan is ________________.

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

In 2006, a significant indicator of the U.S. economic decline was:

Explain what started the financial crisis of 2006 and why it escalated on a such a widespread scale.

When determining a form of business organization, all of the following are considered EXCEPT:

This type of business organization is legally independent entirely from its owners.

This subarea of finance involves methods and techniques to make appropriate decisions about what kinds of securities to own, which firms' securities to buy, and how to be paid back in the form that the investor wishes.

Which of the following is an example of aligning managers' personal interests with those of the owners?

The most common type of business in the United States is the __________.

The biggest disadvantage of the sole proprietorship is _________________.

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

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

Which of the following statements is correct?

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

These individuals examine the firm's accounting systems and comment on whether financial statements fairly represent the firm's financial position.

This type of business organization is relatively easy to start, and it is subject to much lighter regulatory and paperwork burden than other business forms.

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

All of the following are functions of the board of directors except ________.

This subarea of finance helps facilitate the capital flows between investors and companies.

Which of the following is the firm's highest-level financial manager?

This is a general term for securities like stocks, bonds, and other assets that represent ownership in a cash flow.

An employee stock option plan is ________________.

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