Question 1

Nonwage compensation that might actually enhance owner value, in that such items may boost managers' productivity.

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 2

From the perspective of ownership risk, the best form of business organization 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 3

The board of directors:

Accepted Answer

A) are hired by the CEO. 
B) are elected by shareholders. 
C) have unlimited liability since they oversee the day-to-day operations of the firm. 
D) are employed by the Securities Exchange Commission to ensure its rules and regulations have been met. 
A) are hired by the CEO. 
B) are elected by shareholders. 
C) have unlimited liability since they oversee the day-to-day operations of the firm. 
D) are employed by the Securities Exchange Commission to ensure its rules and regulations have been met.

Question 4

From the perspective of control, the best form of business organization 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 5

From the perspective of access to capital, the best form of business organization 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 6

Agency problems exist in which forms of business ownership?

Accepted Answer

A) Sole proprietorship 
B) S corporation 
C) Partnership 
D) Corporation 
A) Sole proprietorship 
B) S corporation 
C) Partnership 
D) Corporation

Question 7

For corporations, maximizing the value of owner's equity can also be stated as:

Accepted Answer

A) maximizing retained earnings. 
B) maximizing earnings per share. 
C) maximizing net income. 
D) maximizing the stock price. 
A) maximizing retained earnings. 
B) maximizing earnings per share. 
C) maximizing net income. 
D) maximizing the stock price.

Question 8

Which of the following is NOT a function of the board of directors?

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 9

A potential future negative impact to value and/or cash flows is often discussed in terms of probability of loss and the expected magnitude of the loss. This is called:

Accepted Answer

A) options. 
B) standard deviation. 
C) coefficient of variation. 
D) risk. 
A) options. 
B) standard deviation. 
C) coefficient of variation. 
D) risk.

Question 10

Corporate stakeholders include all of the following EXCEPT:

Accepted Answer

A) employees. 
B) shareholders. 
C) suppliers. 
D) auditors. 
A) employees. 
B) shareholders. 
C) suppliers. 
D) auditors.

Question 11

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 are impacted by finance. 
A) Borrowing money to purchase cars or homes. 
B) Making credit card payments. 
C) Making retirement decisions. 
D) All of these are impacted by finance.

Question 12

Restricted stock is:

Accepted Answer

A) a special type of stock that is not transferable from the current holder to others until specific conditions are satisfied. 
B) a special type of stock that can be converted into corporate bonds after a specific amount of time has elapsed. 
C) a special type of stock that is a result of offering an employee stock ownership plan. 
D) None of these answers is correct. 
A) a special type of stock that is not transferable from the current holder to others until specific conditions are satisfied. 
B) a special type of stock that can be converted into corporate bonds after a specific amount of time has elapsed. 
C) a special type of stock that is a result of offering an employee stock ownership plan. 
D) None of these answers is correct.

Question 13

This subarea of finance looks at firm decisions in acquiring and utilizing cash received from investors or from retained earnings.

Accepted Answer

A) Investments 
B) Financial management 
C) Treasury management 
D) None of these 
A) Investments 
B) Financial management 
C) Treasury management 
D) None of these

Question 14

In the financial crisis that started 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 15

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 16

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 are basic approaches to minimizing the agency problem. 
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 are basic approaches to minimizing the agency problem.

Question 17

Which of the following statements is incorrect?

Accepted Answer

A) Sole proprietorships are subject to less regulation. 
B) Both angel investors and venture capitalists exchange capital for ownership. 
C) Shareholders are responsible for paying off the corporate bonds in the event of a bankruptcy. 
D) All of these statements are correct. 
A) Sole proprietorships are subject to less regulation. 
B) Both angel investors and venture capitalists exchange capital for ownership. 
C) Shareholders are responsible for paying off the corporate bonds in the event of a bankruptcy. 
D) All of these statements are correct.

Question 18

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 19

Which of the following statements is correct?

Accepted Answer

A) Accountants are focused on what happened in the past. 
B) Financial managers are focused on what happened in the past. 
C) Both accountants and financial managers use total quality management systems to standardize data. 
D) Financial managers double-check the accountant's statements. 
A) Accountants are focused on what happened in the past. 
B) Financial managers are focused on what happened in the past. 
C) Both accountants and financial managers use total quality management systems to standardize data. 
D) Financial managers double-check the accountant's statements.

Question 20

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.

Nonwage compensation that might actually enhance owner value, in that such items may boost managers' productivity.

From the perspective of ownership risk, the best form of business organization is the:

The board of directors:

From the perspective of control, the best form of business organization is the:

From the perspective of access to capital, the best form of business organization is the:

Agency problems exist in which forms of business ownership?

For corporations, maximizing the value of owner's equity can also be stated as:

Which of the following is NOT a function of the board of directors?

A potential future negative impact to value and/or cash flows is often discussed in terms of probability of loss and the expected magnitude of the loss. This is called:

Corporate stakeholders include all of the following EXCEPT:

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

Restricted stock is:

This subarea of finance looks at firm decisions in acquiring and utilizing cash received from investors or from retained earnings.

In the financial crisis that started in 2006, a significant indicator of the U.S. economic decline was:

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

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

Which of the following statements is incorrect?

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

Which of the following statements is correct?

Which of the following statements is correct?

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

Nonwage compensation that might actually enhance owner value, in that such items may boost managers' productivity.

From the perspective of ownership risk, the best form of business organization is the:

The board of directors:

From the perspective of control, the best form of business organization is the:

From the perspective of access to capital, the best form of business organization is the:

Agency problems exist in which forms of business ownership?

For corporations, maximizing the value of owner's equity can also be stated as:

Which of the following is NOT a function of the board of directors?

A potential future negative impact to value and/or cash flows is often discussed in terms of probability of loss and the expected magnitude of the loss. This is called:

Corporate stakeholders include all of the following EXCEPT:

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

Restricted stock is:

This subarea of finance looks at firm decisions in acquiring and utilizing cash received from investors or from retained earnings.

In the financial crisis that started in 2006, a significant indicator of the U.S. economic decline was:

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

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

Which of the following statements is incorrect?

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

Which of the following statements is correct?

Which of the following statements is correct?

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