Question 1

The goal of financial management is to increase the:

Accepted Answer

A) future value of the firm's total equity. 
B) book value of equity. 
C) dividends paid per share. 
D) current market value per share 
E) number of shares outstanding. 
A) future value of the firm's total equity. 
B) book value of equity. 
C) dividends paid per share. 
D) current market value per share 
E) number of shares outstanding.

Question 2

Which one of the following is a capital structure decision?

Accepted Answer

A) Determining the optimal inventory level 
B) Establishing the preferred debt-equity level 
C) Selecting new equipment to purchase 
D) Setting the terms of sale for credit sales 
E) Determining when suppliers should be paid 
A) Determining the optimal inventory level 
B) Establishing the preferred debt-equity level 
C) Selecting new equipment to purchase 
D) Setting the terms of sale for credit sales 
E) Determining when suppliers should be paid

Question 3

An auction market:

Accepted Answer

A) is an electronic means of exchanging securities. 
B) has a physical trading floor. 
C) handles primary market transactions exclusively. 
D) is also referred to as an OTC market. 
E) is dealer-based. 
A) is an electronic means of exchanging securities. 
B) has a physical trading floor. 
C) handles primary market transactions exclusively. 
D) is also referred to as an OTC market. 
E) is dealer-based.

Question 4

The primary goal of financial management is to maximize:

Accepted Answer

A) current profits. 
B) market share. 
C) current dividends. 
D) the market value of existing stock. 
E) revenue growth. 
A) current profits. 
B) market share. 
C) current dividends. 
D) the market value of existing stock. 
E) revenue growth.

Question 5

A corporation:

Accepted Answer

A) is ultimately controlled by its board of directors. 
B) is a legal entity separate from its owners. 
C) is prohibited from entering into contractual agreements. 
D) has its identity defined by its bylaws. 
E) has its existence regulated by the rules set forth in its charter. 
A) is ultimately controlled by its board of directors. 
B) is a legal entity separate from its owners. 
C) is prohibited from entering into contractual agreements. 
D) has its identity defined by its bylaws. 
E) has its existence regulated by the rules set forth in its charter.

Question 6

The Sarbanes-Oxley Act:

Accepted Answer

A) require the corporate officers to personally attest that the financial statements are a fair representation of the company's financial results. 
B) requires all corporations to fully disclose its financial dealings to the general public. 
C) places the responsibility for a firm's financial statements solely on the chief financial officer. 
D) requires that the board of directors be solely responsible for the firm's financial dealings. 
E) places total responsibility for the financial statements of a firm on the auditor who certifies the statements. 
A) require the corporate officers to personally attest that the financial statements are a fair representation of the company's financial results. 
B) requires all corporations to fully disclose its financial dealings to the general public. 
C) places the responsibility for a firm's financial statements solely on the chief financial officer. 
D) requires that the board of directors be solely responsible for the firm's financial dealings. 
E) places total responsibility for the financial statements of a firm on the auditor who certifies the statements.

Question 7

The Sarbanes-Oxley Act of 2002 has:

Accepted Answer

A) reduced the annual compliance costs of all publicly traded firms in the U.S. 
B) decreased senior management's involvement in the corporate annual report. 
C) greatly increased the number of U.S.firms that are going public for the first time. 
D) decreased the number of U.S.firms going public on foreign exchanges. 
E) essentially made officers of publicly traded firms personally responsible for the firm's financial statements. 
A) reduced the annual compliance costs of all publicly traded firms in the U.S. 
B) decreased senior management's involvement in the corporate annual report. 
C) greatly increased the number of U.S.firms that are going public for the first time. 
D) decreased the number of U.S.firms going public on foreign exchanges. 
E) essentially made officers of publicly traded firms personally responsible for the firm's financial statements.

Question 8

An employee has a claim on the cash flows of Martin's Machines.This claim is defined as a claim by one of the firm's:

Accepted Answer

A) residual owners. 
B) shareholders. 
C) financiers. 
D) provisional partners. 
E) stakeholders. 
A) residual owners. 
B) shareholders. 
C) financiers. 
D) provisional partners. 
E) stakeholders.

Question 9

One advantage of the corporate form of organization is the:

Accepted Answer

A) taxation of the corporate profits. 
B) unlimited liability for its shareholders. 
C) double taxation of profits. 
D) ability to raise larger sums of equity capital than other organizational forms. 
E) ease of formation compared to other organizational forms. 
A) taxation of the corporate profits. 
B) unlimited liability for its shareholders. 
C) double taxation of profits. 
D) ability to raise larger sums of equity capital than other organizational forms. 
E) ease of formation compared to other organizational forms.

Question 10

Capital budgeting includes the evaluation of which of the following?

Accepted Answer

A) Size of future cash flows only 
B) Size and timing of future cash flows only 
C) Timing and risk of future cash flows only 
D) Risk and size of future cash flows only 
E) Size, timing, and risk of future cash flows 
A) Size of future cash flows only 
B) Size and timing of future cash flows only 
C) Timing and risk of future cash flows only 
D) Risk and size of future cash flows only 
E) Size, timing, and risk of future cash flows

Question 11

Which one of the following is contained in the corporate bylaws?

Accepted Answer

A) Procedures for electing corporate directors 
B) State of incorporation 
C) Number of authorized shares 
D) Intended life of the corporation 
E) Business purpose of the corporation 
A) Procedures for electing corporate directors 
B) State of incorporation 
C) Number of authorized shares 
D) Intended life of the corporation 
E) Business purpose of the corporation

Question 12

Matt and Alicia created a firm that is a separate legal entity and will share ownership of that firm on a 75/25 basis.Which type of entity did they create if they have no personal liability for the firm's debts?

Accepted Answer

A) Limited partnership 
B) Corporation 
C) Sole proprietorship 
D) General partnership 
E) Public company 
A) Limited partnership 
B) Corporation 
C) Sole proprietorship 
D) General partnership 
E) Public company

Question 13

The primary goal of financial management is most associated with increasing the:

Accepted Answer

A) dollar amount of each sale. 
B) traffic flow within the firm's stores. 
C) the fixed costs while lowering the variable costs. 
D) firm's liquidity. 
E) market value of the firm. 
A) dollar amount of each sale. 
B) traffic flow within the firm's stores. 
C) the fixed costs while lowering the variable costs. 
D) firm's liquidity. 
E) market value of the firm.

Question 14

One example of a primary market transaction would be the:

Accepted Answer

A) sale of 100 shares of stock by Maria to her best friend. 
B) purchase by Theo of 5,000 shares of stock from his father. 
C) sale of 1,000 shares of newly issued stock by Alt Company to Miquel. 
D) sale by Terry of 50,000 shares of stock to his brother. 
E) sale of 5,000 shares of stock owned by a corporate CEO to his son. 
A) sale of 100 shares of stock by Maria to her best friend. 
B) purchase by Theo of 5,000 shares of stock from his father. 
C) sale of 1,000 shares of newly issued stock by Alt Company to Miquel. 
D) sale by Terry of 50,000 shares of stock to his brother. 
E) sale of 5,000 shares of stock owned by a corporate CEO to his son.

Question 15

You contacted your stock broker this morning and placed an order to sell 300 shares of a stock that trades on the NYSE.This sale will occur in the:

Accepted Answer

A) dealer market. 
B) over-the-counter market. 
C) secondary market. 
D) primary market. 
E) tertiary market. 
A) dealer market. 
B) over-the-counter market. 
C) secondary market. 
D) primary market. 
E) tertiary market.

Question 16

The shareholders of Weil's Markets would benefit if the firm were to be acquired by Better Foods.However,Weil's board of directors rejects the acquisition offer.This is an example of:

Accepted Answer

A) a corporate takeover. 
B) a capital structure issue. 
C) a working capital decision. 
D) an agency conflict. 
E) a compensation issue. 
A) a corporate takeover. 
B) a capital structure issue. 
C) a working capital decision. 
D) an agency conflict. 
E) a compensation issue.

Question 17

Corporate shareholders:

Accepted Answer

A) are proportionately liable for the firm's debts. 
B) are protected from all financial losses. 
C) have the ability to change the corporation's bylaws. 
D) receive tax-free distributions since all profits are taxed at the corporate level. 
E) have basically no control over the actual corporation. 
A) are proportionately liable for the firm's debts. 
B) are protected from all financial losses. 
C) have the ability to change the corporation's bylaws. 
D) receive tax-free distributions since all profits are taxed at the corporate level. 
E) have basically no control over the actual corporation.

Question 18

Which one of the following statements is correct?

Accepted Answer

A) All of the major stock exchanges are U.S.based. 
B) The NYSE was created by the National Association of Securities Dealers in the early 1930s. 
C) The Chicago Stock Exchange is a dealer market. 
D) OTC markets have a physical trading floor generally located in either New York City or Chicago. 
E) The primary purpose of the NYSE is to match buyers with sellers. 
A) All of the major stock exchanges are U.S.based. 
B) The NYSE was created by the National Association of Securities Dealers in the early 1930s. 
C) The Chicago Stock Exchange is a dealer market. 
D) OTC markets have a physical trading floor generally located in either New York City or Chicago. 
E) The primary purpose of the NYSE is to match buyers with sellers.

The goal of financial management is to increase the:

Which one of the following is a capital structure decision?

An auction market:

The primary goal of financial management is to maximize:

A corporation:

The Sarbanes-Oxley Act:

The Sarbanes-Oxley Act of 2002 has:

An employee has a claim on the cash flows of Martin's Machines.This claim is defined as a claim by one of the firm's:

One advantage of the corporate form of organization is the:

Capital budgeting includes the evaluation of which of the following?

Which one of the following is contained in the corporate bylaws?

Matt and Alicia created a firm that is a separate legal entity and will share ownership of that firm on a 75/25 basis.Which type of entity did they create if they have no personal liability for the firm's debts?

The primary goal of financial management is most associated with increasing the:

One example of a primary market transaction would be the:

You contacted your stock broker this morning and placed an order to sell 300 shares of a stock that trades on the NYSE.This sale will occur in the:

The shareholders of Weil's Markets would benefit if the firm were to be acquired by Better Foods.However,Weil's board of directors rejects the acquisition offer.This is an example of:

Corporate shareholders:

Which one of the following statements is correct?

Financial Statements,Taxes,and Cash Flow

Working With Financial Statements

Introduction to Valuation: The Time Value of Money

Discounted Cash Flow Valuation

Interest Rates and Bond Valuation

Equity Markets and Stock Valuation

Net Present Value and Other Investment Criteria

Making Capital Investment Decisions

Some Lessons From Capital Market History

Risk and Return

Cost of Capital

Leverage and Capital Structure

Dividends and Dividend Policy

Raising Capital

Short-Term Financial Planning

Working Capital Management

International Aspects of Financial Management

Filters

Exam 1: Introduction to Financial Management

The goal of financial management is to increase the:

Which one of the following is a capital structure decision?

An auction market:

The primary goal of financial management is to maximize:

A corporation:

The Sarbanes-Oxley Act:

The Sarbanes-Oxley Act of 2002 has:

An employee has a claim on the cash flows of Martin's Machines.This claim is defined as a claim by one of the firm's:

One advantage of the corporate form of organization is the:

Capital budgeting includes the evaluation of which of the following?

Which one of the following is contained in the corporate bylaws?

Matt and Alicia created a firm that is a separate legal entity and will share ownership of that firm on a 75/25 basis.Which type of entity did they create if they have no personal liability for the firm's debts?

The primary goal of financial management is most associated with increasing the:

One example of a primary market transaction would be the:

You contacted your stock broker this morning and placed an order to sell 300 shares of a stock that trades on the NYSE.This sale will occur in the:

The shareholders of Weil's Markets would benefit if the firm were to be acquired by Better Foods.However,Weil's board of directors rejects the acquisition offer.This is an example of:

Corporate shareholders:

Which one of the following statements is correct?

Financial Statements,Taxes,and Cash Flow

Working With Financial Statements

Introduction to Valuation: The Time Value of Money

Discounted Cash Flow Valuation

Interest Rates and Bond Valuation

Equity Markets and Stock Valuation

Net Present Value and Other Investment Criteria

Making Capital Investment Decisions

Some Lessons From Capital Market History

Risk and Return

Cost of Capital

Leverage and Capital Structure

Dividends and Dividend Policy

Raising Capital

Short-Term Financial Planning

Working Capital Management

International Aspects of Financial Management

Filters