Question 1

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 
D) None of these will reduce the amount of capital returned to the investors. 
A) Retained earnings 
B) Taxes 
C) Dividends 
D) None of these will reduce the amount of capital returned to the investors.

Question 2

Which of the following is NOT considered a hybrid organization?

Accepted Answer

A) S corporation 
B) Limited liability partnership 
C) Limited liability company 
D) Limited partnership 
E) All of these are considered hybrid organizations. 
A) S corporation 
B) Limited liability partnership 
C) Limited liability company 
D) Limited partnership 
E) All of these are considered hybrid organizations.

Question 3

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 4

This group is elected by stockholders to oversee management in a corporation.

Accepted Answer

A) Chief counselors 
B) Chief executives 
C) Board of directors 
D) Auditors 
A) Chief counselors 
B) Chief executives 
C) Board of directors 
D) Auditors

Question 5

The financial crisis that started in 2006 was magnified by which of the following?

Accepted Answer

A) Public concern over the war in Afghanistan 
B) Consistently increasing oil and gas prices 
C) Ethical issues affecting high value investment 
D) Mortgage lenders securitizing large quantities of their loans 
A) Public concern over the war in Afghanistan 
B) Consistently increasing oil and gas prices 
C) Ethical issues affecting high value investment 
D) Mortgage lenders securitizing large quantities of their loans

Question 6

Individuals who provide small amounts of capital and expert business advice to small firms in exchange for an ownership stake in the firm are referred to as:

Accepted Answer

A) institutional investors. 
B) corporate investors. 
C) angel investors. 
D) capital investors. 
A) institutional investors. 
B) corporate investors. 
C) angel investors. 
D) capital investors.

Question 7

Which of these does NOT act as a monitor of how the firm is being run outside the firm?

Accepted Answer

A) Auditors 
B) Analysts 
C) Credit rating agencies 
D) Members of the board of directors 
A) Auditors 
B) Analysts 
C) Credit rating agencies 
D) Members of the board of directors

Question 8

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 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

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 11

Which of the following is defined as a group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same laws and regulations?

Accepted Answer

A) Investments 
B) Asset classes 
C) Market instruments 
D) Financial markets 
A) Investments 
B) Asset classes 
C) Market instruments 
D) Financial markets

Question 12

The agency relationship in corporate finance refers to:

Accepted Answer

A) when the shareholders hire a manager to run their company. 
B) when the corporate hires an advertising agency to market their new product or service. 
C) when the board of directors are elected to staggered terms. 
D) when the board of directors oversee the CEO. 
A) when the shareholders hire a manager to run their company. 
B) when the corporate hires an advertising agency to market their new product or service. 
C) when the board of directors are elected to staggered terms. 
D) when the board of directors oversee the CEO.

Question 13

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 is 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 is correct.

Question 14

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 15

All of the following are advantages to organizing as a corporation EXCEPT:

Accepted Answer

A) limited liability. 
B) double taxation. 
C) easy access to capital. 
D) easy to transfer ownership. 
A) limited liability. 
B) double taxation. 
C) easy access to capital. 
D) easy to transfer ownership.

Question 16

Which statement is incorrect regarding hybrid organizations?

Accepted Answer

A) They offer single taxation. 
B) They offer limited risk to the owners. 
C) They offer the same type of control as a sole proprietorship. 
D) All of these answers are correct statements. 
A) They offer single taxation. 
B) They offer limited risk to the owners. 
C) They offer the same type of control as a sole proprietorship. 
D) All of these answers are correct statements.

Question 17

From a taxation perspective, the form of business organization with the highest business level taxes is the:

Accepted Answer

A) sole proprietorship. 
B) corporation. 
C) partnership. 
D) S corporation. 
A) sole proprietorship. 
B) corporation. 
C) partnership. 
D) S corporation.

Question 18

Which of the following managers would NOT use finance?

Accepted Answer

A) Operational managers 
B) Marketing managers 
C) Human resource managers 
D) All of these would use finance. 
A) Operational managers 
B) Marketing managers 
C) Human resource managers 
D) All of these would use finance.

Question 19

As individual legal entities, corporations assume liability for their own debts, so the shareholders hold:

Accepted Answer

A) only limited liability. 
B) unlimited liability. 
C) shared liability. 
D) joint liability. 
A) only limited liability. 
B) unlimited liability. 
C) shared liability. 
D) joint liability.

Question 20

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

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?

Which of the following is NOT considered a hybrid organization?

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.

This group is elected by stockholders to oversee management in a corporation.

The financial crisis that started in 2006 was magnified by which of the following?

Individuals who provide small amounts of capital and expert business advice to small firms in exchange for an ownership stake in the firm are referred to as:

Which of these does NOT act as a monitor of how the firm is being run outside the firm?

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

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

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 is defined as a group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same laws and regulations?

The agency relationship in corporate finance refers to:

An employee stock option plan is:

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

All of the following are advantages to organizing as a corporation EXCEPT:

Which statement is incorrect regarding hybrid organizations?

From a taxation perspective, the form of business organization with the highest business level taxes is the:

Which of the following managers would NOT use finance?

As individual legal entities, corporations assume liability for their own debts, so the shareholders hold:

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

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

Filters

Exam 1: Introduction to Financial Management

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?

Which of the following is NOT considered a hybrid organization?

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.

This group is elected by stockholders to oversee management in a corporation.

The financial crisis that started in 2006 was magnified by which of the following?

Individuals who provide small amounts of capital and expert business advice to small firms in exchange for an ownership stake in the firm are referred to as:

Which of these does NOT act as a monitor of how the firm is being run outside the firm?

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

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

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 is defined as a group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same laws and regulations?

The agency relationship in corporate finance refers to:

An employee stock option plan is:

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

All of the following are advantages to organizing as a corporation EXCEPT:

Which statement is incorrect regarding hybrid organizations?

From a taxation perspective, the form of business organization with the highest business level taxes is the:

Which of the following managers would NOT use finance?

As individual legal entities, corporations assume liability for their own debts, so the shareholders hold:

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

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

Filters