Question 1

In a sole proprietorship,the owner is personally responsible without limitation for the liabilities incurred.

Accepted Answer

A) True 
 B)False

Question 2

The life of a corporation is not dependent upon the status of the investors.

Accepted Answer

A) True 
 B)False

Question 3

In finance,we assume that investors are generally

Accepted Answer

A) neutral to risk. 
B) averse to risk. 
C) fond of risk. 
D) none of the above. 
A) neutral to risk. 
B) averse to risk. 
C) fond of risk. 
D) none of the above.

Question 4

A corporation is owned by

Accepted Answer

A) shareholders and partners. 
B) the shareholders who hold the company's stock. 
C) the Board of Directors. 
D) its Chief Executive Officer. 
A) shareholders and partners. 
B) the shareholders who hold the company's stock. 
C) the Board of Directors. 
D) its Chief Executive Officer.

Question 5

Managers of corporations need to act in an ethical manner

Accepted Answer

A) because ethics violations will be punished by the law. 
B) because a business must be trusted by investors,customer and the public if it is to succeed. 
C) because business managers must answer to a higher authority. 
D) because ethical behavior is its own justification. 
A) because ethics violations will be punished by the law. 
B) because a business must be trusted by investors,customer and the public if it is to succeed. 
C) because business managers must answer to a higher authority. 
D) because ethical behavior is its own justification.

Question 6

Which of the following goals is in the best long-term interest of stockholders?

Accepted Answer

A) Profit maximization 
B) Risk minimization 
C) Maximizing of the market value of the existing shareholders' common stock 
D) Maximizing sales revenues 
A) Profit maximization 
B) Risk minimization 
C) Maximizing of the market value of the existing shareholders' common stock 
D) Maximizing sales revenues

Question 7

The goal of maximize shareholder wealth inevitably conflicts with socially responsible behavior on the part of corporation.

Accepted Answer

A) True 
 B)False

Question 8

Which one of the following categories of owners enjoys limited liability?

Accepted Answer

A) General partners in a limited partnership or limited liability company 
B) Shareholders (common stock)of a corporation 
C) Sole proprietors 
D) Both A and B 
A) General partners in a limited partnership or limited liability company 
B) Shareholders (common stock)of a corporation 
C) Sole proprietors 
D) Both A and B

Question 9

The goal of the firm should be the maximization of profit.

Accepted Answer

A) True 
 B)False

Question 10

What does the agency problem refer to?

Accepted Answer

A) The conflict that exists between the board of directors and the employees of the firm. 
B) The problem associated with financial managers and Internal Revenue agents. 
C) The conflict that exists between stockbrokers and investors. 
D) The problem that results from potential conflicts of interest between the manager of a business and the stockholders. 
A) The conflict that exists between the board of directors and the employees of the firm. 
B) The problem associated with financial managers and Internal Revenue agents. 
C) The conflict that exists between stockbrokers and investors. 
D) The problem that results from potential conflicts of interest between the manager of a business and the stockholders.

Question 11

There is no legal distinction made between the assets of the business and the personal assets of the owners in the limited partnership.

Accepted Answer

A) True 
 B)False

Question 12

Profit maximization does not adequately describe the goal of the firm because

Accepted Answer

A) profit maximization does not require the consideration of risk. 
B) profit maximization ignores the timing of a project's return. 
C) maximization of dividend payout ratio is a better description of the goal of the firm. 
D) A and B. 
A) profit maximization does not require the consideration of risk. 
B) profit maximization ignores the timing of a project's return. 
C) maximization of dividend payout ratio is a better description of the goal of the firm. 
D) A and B.

Question 13

Investors choose to invest in higher risk investments because these investments offer higher

Accepted Answer

A) expected returns. 
B) inflation. 
C) actual returns. 
D) future consumption. 
A) expected returns. 
B) inflation. 
C) actual returns. 
D) future consumption.

Question 14

If managers do not pursue the goal of maximizing shareholder wealth

Accepted Answer

A) they concentrate on more important matters like growing market share. 
B) they can focus more on social responsibilities. 
C) they are likely to lose their jobs. 
D) they can focus more on long-term profitability. 
A) they concentrate on more important matters like growing market share. 
B) they can focus more on social responsibilities. 
C) they are likely to lose their jobs. 
D) they can focus more on long-term profitability.

Question 15

In an efficient market,prices will quickly adjust to new information.

Accepted Answer

A) True 
 B)False

Question 16

Finance managers need to interact constantly with

Accepted Answer

A) marketing managers. 
B) accounting staff. 
C) management information systems staff. 
D) all of the above. 
A) marketing managers. 
B) accounting staff. 
C) management information systems staff. 
D) all of the above.

Question 17

The owners of a corporation are liable for the corporation's obligations up to the amount of their investment.

Accepted Answer

A) True 
 B)False

Question 18

Briefly discuss the incentives for financial managers to conduct their business in an ethical manner.

Accepted Answer

Extreme ethical lapses such as those evi

Question 19

The goal of profit maximization ignores the timing of profit.

Accepted Answer

A) True 
 B)False

Question 20

One of the problems associated with profit maximization is that it ignores the timing of a project's return.

Accepted Answer

A) True 
 B)False

In a sole proprietorship,the owner is personally responsible without limitation for the liabilities incurred.

The life of a corporation is not dependent upon the status of the investors.

In finance,we assume that investors are generally

A corporation is owned by

Managers of corporations need to act in an ethical manner

Which of the following goals is in the best long-term interest of stockholders?

The goal of maximize shareholder wealth inevitably conflicts with socially responsible behavior on the part of corporation.

Which one of the following categories of owners enjoys limited liability?

The goal of the firm should be the maximization of profit.

What does the agency problem refer to?

There is no legal distinction made between the assets of the business and the personal assets of the owners in the limited partnership.

Profit maximization does not adequately describe the goal of the firm because

Investors choose to invest in higher risk investments because these investments offer higher

If managers do not pursue the goal of maximizing shareholder wealth

In an efficient market,prices will quickly adjust to new information.

Finance managers need to interact constantly with

The owners of a corporation are liable for the corporation's obligations up to the amount of their investment.

Briefly discuss the incentives for financial managers to conduct their business in an ethical manner.

The goal of profit maximization ignores the timing of profit.

One of the problems associated with profit maximization is that it ignores the timing of a project's return.

Firms and the Financial Market

Understanding Financial Statements,taxes,and Cash Flows

Financial Analysis-Sizing up Firm Performance

Time Value of Money-The Basics

The Time Value of Money-Annuities and Other Topics

An Introduction to Risk and Return-History of Financial Market Returns

Risk and Return-Capital Market Theory

Debt Valuation and Interest Rates

Stock Valuation

Investment Decision Criteria

Analyzing Project Cash Flows

Risk Analysis and Project Evaluation

The Cost of Capital

Capital Structure Policy

Dividend Policy

Financial Forecasting and Planning

Working Capital Management

International Business Finance

Corporate Risk Management

Filters

Exam 1: Getting Started-Principles of Finance

In a sole proprietorship,the owner is personally responsible without limitation for the liabilities incurred.

The life of a corporation is not dependent upon the status of the investors.

In finance,we assume that investors are generally

A corporation is owned by

Managers of corporations need to act in an ethical manner

Which of the following goals is in the best long-term interest of stockholders?

The goal of maximize shareholder wealth inevitably conflicts with socially responsible behavior on the part of corporation.

Which one of the following categories of owners enjoys limited liability?

The goal of the firm should be the maximization of profit.

What does the agency problem refer to?

There is no legal distinction made between the assets of the business and the personal assets of the owners in the limited partnership.

Profit maximization does not adequately describe the goal of the firm because

Investors choose to invest in higher risk investments because these investments offer higher

If managers do not pursue the goal of maximizing shareholder wealth

In an efficient market,prices will quickly adjust to new information.

Finance managers need to interact constantly with

The owners of a corporation are liable for the corporation's obligations up to the amount of their investment.

Briefly discuss the incentives for financial managers to conduct their business in an ethical manner.

The goal of profit maximization ignores the timing of profit.

One of the problems associated with profit maximization is that it ignores the timing of a project's return.

Firms and the Financial Market

Understanding Financial Statements,taxes,and Cash Flows

Financial Analysis-Sizing up Firm Performance

Time Value of Money-The Basics

The Time Value of Money-Annuities and Other Topics

An Introduction to Risk and Return-History of Financial Market Returns

Risk and Return-Capital Market Theory

Debt Valuation and Interest Rates

Stock Valuation

Investment Decision Criteria

Analyzing Project Cash Flows

Risk Analysis and Project Evaluation

The Cost of Capital

Capital Structure Policy

Dividend Policy

Financial Forecasting and Planning

Working Capital Management

International Business Finance

Corporate Risk Management

Filters