Question 1

An increase in firm risk tends to result in a higher share price since the stockholder must be compensated for the greater risk.

Accepted Answer

A) True 
 B)False  False

Question 2

The controller is commonly responsible for

Accepted Answer

A)  managing cash. 
B)  financial accounting. 
C)  managing credit activities. 
D)  financial planning. 
A)  managing cash. 
B)  financial accounting. 
C)  managing credit activities. 
D)  financial planning. B

Question 3

The corporate controller typically handles the accounting activities, such as tax management, data processing, and cost and financial accounting.

Accepted Answer

A) True 
 B)False  True

Question 4

The financial manager's financing decisions determine

Accepted Answer

A)  both the mix and the type of assets found on the firm's balance sheet. 
B)  the most appropriate mix of short-term and long-term financing. 
C)  both the mix and the type of assets and liabilities found on the firm's balance sheet. 
D)  the proportion of the firm's earnings to be paid as dividend. 
A)  both the mix and the type of assets found on the firm's balance sheet. 
B)  the most appropriate mix of short-term and long-term financing. 
C)  both the mix and the type of assets and liabilities found on the firm's balance sheet. 
D)  the proportion of the firm's earnings to be paid as dividend.

Question 5

In large companies, the project finance manager is responsible for coordinating the assets and liabilities of the employees' pension fund.

Accepted Answer

A) True 
 B)False

Question 6

Profit maximization as a goal is not ideal because it does NOT directly consider

Accepted Answer

A)  risk and cash flow. 
B)  cash flow and stock price. 
C)  risk and EPS. 
D)  EPS and stock price. 
A)  risk and cash flow. 
B)  cash flow and stock price. 
C)  risk and EPS. 
D)  EPS and stock price.

Question 7

Agents of corporate owners are themselves owners of the firm and have been elected by all the corporate owners to represent them in decision-making and management of the firm.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following legal forms of organization is characterized by limited liability?

Accepted Answer

A)  Sole proprietorship. 
B)  Partnership. 
C)  Corporation. 
D)  Professional partnership. 
A)  Sole proprietorship. 
B)  Partnership. 
C)  Corporation. 
D)  Professional partnership.

Question 9

The likelihood that managers may place personal goals ahead of corporate goals is called the agency problem.

Accepted Answer

A) True 
 B)False

Question 10

A major weakness of a partnership is

Accepted Answer

A)  limited liability. 
B)  difficulty liquidating or transferring ownership. 
C)  access to capital markets. 
D)  low organizational costs. 
A)  limited liability. 
B)  difficulty liquidating or transferring ownership. 
C)  access to capital markets. 
D)  low organizational costs.

Question 11

The president or chief executive officer is elected by the firm's stockholders and has ultimate authority to guide corporate affairs and make general policy.

Accepted Answer

A) True 
 B)False

Question 12

When considering each financial decision alternative or possible action in terms of its impact on the share price of the firm's stock, financial managers should accept only those actions that are expected to increase the firm's profitability.

Accepted Answer

A) True 
 B)False

Question 13

The Sarbanes-Oxley Act of 2002 did all of the following EXCEPT

Accepted Answer

A)  tighten audit regulations and controls. 
B)  toughen penalties against overcompensated executives. 
C)  toughen penalties against executives who commit corporate fraud. 
D)  All of the above are true. 
A)  tighten audit regulations and controls. 
B)  toughen penalties against overcompensated executives. 
C)  toughen penalties against executives who commit corporate fraud. 
D)  All of the above are true.

Question 14

The primary goal of the financial manager is

Accepted Answer

A)  minimizing risk. 
B)  maximizing profit. 
C)  maximizing wealth. 
D)  minimizing return. 
A)  minimizing risk. 
B)  maximizing profit. 
C)  maximizing wealth. 
D)  minimizing return.

Question 15

The capital expenditures analyst/manager is responsible for the evaluation and recommendation of proposed asset investments and may be involved in the financial aspects of implementation of approved investments.

Accepted Answer

A) True 
 B)False

Question 16

Finance can be defined as

Accepted Answer

A)  the system of debits and credits. 
B)  the science of the production, distribution, and consumption of wealth. 
C)  the art and science of managing money. 
D)  the art of merchandising products and services. 
A)  the system of debits and credits. 
B)  the science of the production, distribution, and consumption of wealth. 
C)  the art and science of managing money. 
D)  the art of merchandising products and services.

Question 17

The financial analyst administers the firm's credit policy by analyzing or managing the evaluation of credit applications, extending credit, and monitoring and collecting accounts receivable.

Accepted Answer

A) True 
 B)False

Question 18

A more recent issue that is causing major problems in the business community is

Accepted Answer

A)  the privatization of ownership. 
B)  short-term versus long-term financial goals of management. 
C)  ethical problems. 
D)  environmental concerns. 
A)  the privatization of ownership. 
B)  short-term versus long-term financial goals of management. 
C)  ethical problems. 
D)  environmental concerns.

Question 19

All of the following as considered stakeholders EXCEPT

Accepted Answer

A)  consumers. 
B)  suppliers. 
C)  employees. 
D)  competitors. 
A)  consumers. 
B)  suppliers. 
C)  employees. 
D)  competitors.

Question 20

The conflict between the goals of a firm's owners and the goals of its non-owner managers is

Accepted Answer

A)  the agency problem. 
B)  incompatibility. 
C)  serious only when profits decline. 
D)  of little importance in most large U.S. firms. 
A)  the agency problem. 
B)  incompatibility. 
C)  serious only when profits decline. 
D)  of little importance in most large U.S. firms.

An increase in firm risk tends to result in a higher share price since the stockholder must be compensated for the greater risk.

The controller is commonly responsible for

The corporate controller typically handles the accounting activities, such as tax management, data processing, and cost and financial accounting.

The financial manager's financing decisions determine

In large companies, the project finance manager is responsible for coordinating the assets and liabilities of the employees' pension fund.

Profit maximization as a goal is not ideal because it does NOT directly consider

Agents of corporate owners are themselves owners of the firm and have been elected by all the corporate owners to represent them in decision-making and management of the firm.

Which of the following legal forms of organization is characterized by limited liability?

The likelihood that managers may place personal goals ahead of corporate goals is called the agency problem.

A major weakness of a partnership is

The president or chief executive officer is elected by the firm's stockholders and has ultimate authority to guide corporate affairs and make general policy.

When considering each financial decision alternative or possible action in terms of its impact on the share price of the firm's stock, financial managers should accept only those actions that are expected to increase the firm's profitability.

The Sarbanes-Oxley Act of 2002 did all of the following EXCEPT

The primary goal of the financial manager is

The capital expenditures analyst/manager is responsible for the evaluation and recommendation of proposed asset investments and may be involved in the financial aspects of implementation of approved investments.

Finance can be defined as

The financial analyst administers the firm's credit policy by analyzing or managing the evaluation of credit applications, extending credit, and monitoring and collecting accounts receivable.

A more recent issue that is causing major problems in the business community is

All of the following as considered stakeholders EXCEPT

The conflict between the goals of a firm's owners and the goals of its non-owner managers is

The Financial Market Environment

Financial Statements and Ratio Analysis

Cash Flow and Financial Planning

Time Value of Money

Interest Rates and Bond Valuation

Stock Valuation

Risk and Return

The Cost of Capital

Capital Budgeting Techniques

Capital Budgeting Cash Flows and Risk Refinements

Leverage and Capital Structure

Payout Policy

Working Capital and Current Assets Management

Current Liabilities Management

Filters

Exam 1: The Role of Managerial Finance

An increase in firm risk tends to result in a higher share price since the stockholder must be compensated for the greater risk.

The controller is commonly responsible for

The corporate controller typically handles the accounting activities, such as tax management, data processing, and cost and financial accounting.

The financial manager's financing decisions determine

In large companies, the project finance manager is responsible for coordinating the assets and liabilities of the employees' pension fund.

Profit maximization as a goal is not ideal because it does NOT directly consider

Agents of corporate owners are themselves owners of the firm and have been elected by all the corporate owners to represent them in decision-making and management of the firm.

Which of the following legal forms of organization is characterized by limited liability?

The likelihood that managers may place personal goals ahead of corporate goals is called the agency problem.

A major weakness of a partnership is

The president or chief executive officer is elected by the firm's stockholders and has ultimate authority to guide corporate affairs and make general policy.

When considering each financial decision alternative or possible action in terms of its impact on the share price of the firm's stock, financial managers should accept only those actions that are expected to increase the firm's profitability.

The Sarbanes-Oxley Act of 2002 did all of the following EXCEPT

The primary goal of the financial manager is

The capital expenditures analyst/manager is responsible for the evaluation and recommendation of proposed asset investments and may be involved in the financial aspects of implementation of approved investments.

Finance can be defined as

The financial analyst administers the firm's credit policy by analyzing or managing the evaluation of credit applications, extending credit, and monitoring and collecting accounts receivable.

A more recent issue that is causing major problems in the business community is

All of the following as considered stakeholders EXCEPT

The conflict between the goals of a firm's owners and the goals of its non-owner managers is

The Financial Market Environment

Financial Statements and Ratio Analysis

Cash Flow and Financial Planning

Time Value of Money

Interest Rates and Bond Valuation

Stock Valuation

Risk and Return

The Cost of Capital

Capital Budgeting Techniques

Capital Budgeting Cash Flows and Risk Refinements

Leverage and Capital Structure

Payout Policy

Working Capital and Current Assets Management

Current Liabilities Management

Filters