Question 1

If an investor had a choice of receiving $1,000 today or $1,000 in five years,which would the typical investor prefer?

Accepted Answer

A) $1,000 in five years: is better to receive money later rather than sooner. 
B) $1,000 today: it will be worth more than $1,000 received in five years. 
C) $1,000 in five years: it will be worth more than $1,000 received today. 
D) Investors would be indifferent to when they would receive the $1,000. 
E) None of the above. 
A) $1,000 in five years: is better to receive money later rather than sooner. 
B) $1,000 today: it will be worth more than $1,000 received in five years. 
C) $1,000 in five years: it will be worth more than $1,000 received today. 
D) Investors would be indifferent to when they would receive the $1,000. 
E) None of the above. B

Question 2

The financial manager should examine available risk-return trade-offs and make his decision based upon the greatest expected return.

Accepted Answer

A) True 
 B)False  False

Question 3

The area of finance that deals with long-term investment decisions is known as

Accepted Answer

A) capital structure. 
B) working capital management. 
C) financial strategy. 
D) capital budgeting. 
A) capital structure. 
B) working capital management. 
C) financial strategy. 
D) capital budgeting. D

Question 4

For these types of organisation,no distinction is made between business and personal assets.

Accepted Answer

A) Sole proprietorship 
B) General partnership 
C) Limited partnership 
D) Both A and B 
A) Sole proprietorship 
B) General partnership 
C) Limited partnership 
D) Both A and B

Question 5

Which of the following is a characteristic of a limited partnership?

Accepted Answer

A) It allows one or more partners to have limited liability. 
B) It requires one or more of the partners to be a general partner to whom the privilege of limited liability does not apply. 
C) It prohibits the limited partners from participating in the management of the partnership. 
D) All of the above. 
A) It allows one or more partners to have limited liability. 
B) It requires one or more of the partners to be a general partner to whom the privilege of limited liability does not apply. 
C) It prohibits the limited partners from participating in the management of the partnership. 
D) All of the above.

Question 6

Which of the following best describes the goal of the firm?

Accepted Answer

A) The maximisation of the total market value of the firm's common stock 
B) Profit maximisation 
C) Risk minimisation 
D) None of the above 
A) The maximisation of the total market value of the firm's common stock 
B) Profit maximisation 
C) Risk minimisation 
D) None of the above

Question 7

General partners have unrestricted transferability of ownership,while limited partners must have the consent of all partners to transfer their ownership.

Accepted Answer

A) True 
 B)False

Question 8

A sole proprietorship is the most desirable business form in all circumstances.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

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 11

Assume that you are starting a business.Further assume that the business is expected to grow very quickly and a great deal of capital will be needed soon.What type of business organisation would you choose?

Accepted Answer

A) Corporation 
B) General Partnership 
C) Sole proprietorship 
D) Limited partnership 
A) Corporation 
B) General Partnership 
C) Sole proprietorship 
D) Limited partnership

Question 12

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,customers 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,customers 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 13

In a limited partnership,at least one general partner must remain in the association;the privilege of limited liability still applies to this partner.

Accepted Answer

A) True 
 B)False

Question 14

The major sources of financing for corporations are

Accepted Answer

A) partners contributions. 
B) exchanges between shareholders. 
C) interest and dividends. 
D) debt and equity. 
A) partners contributions. 
B) exchanges between shareholders. 
C) interest and dividends. 
D) debt and equity.

Question 15

Discuss the risk/return tradeoff and how it relates to finance.

Accepted Answer

As people are risk averse,they need a hi

Question 16

A limited partner is liable

Accepted Answer

A) for only his or her own share of the partnership's debts. 
B) for his or her own share of the partnership's debts and contingently liable for the other partners shares. 
C) only up to the amount invested by that partner. 
D) for none of the partnership's debts. 
A) for only his or her own share of the partnership's debts. 
B) for his or her own share of the partnership's debts and contingently liable for the other partners shares. 
C) only up to the amount invested by that partner. 
D) for none of the partnership's debts.

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

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

Accepted Answer

A) limited liability company general partners 
B) corporation shareholders 
C) sole proprietors 
D) both A and B 
A) limited liability company general partners 
B) corporation shareholders 
C) sole proprietors 
D) both A and B

Question 19

Briefly discuss why financial decision makers must focus on incremental cash flows when evaluating new projects.

Accepted Answer

Incremental cash flows describe the tota

Question 20

The agency problem arises due to the separation of ownership and control in a corporation.

Accepted Answer

A) True 
 B)False

If an investor had a choice of receiving $1,000 today or $1,000 in five years,which would the typical investor prefer?

The financial manager should examine available risk-return trade-offs and make his decision based upon the greatest expected return.

The area of finance that deals with long-term investment decisions is known as

For these types of organisation,no distinction is made between business and personal assets.

Which of the following is a characteristic of a limited partnership?

Which of the following best describes the goal of the firm?

General partners have unrestricted transferability of ownership,while limited partners must have the consent of all partners to transfer their ownership.

A sole proprietorship is the most desirable business form in all circumstances.

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

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

Assume that you are starting a business.Further assume that the business is expected to grow very quickly and a great deal of capital will be needed soon.What type of business organisation would you choose?

Managers of corporations need to act in an ethical manner

In a limited partnership,at least one general partner must remain in the association;the privilege of limited liability still applies to this partner.

The major sources of financing for corporations are

Discuss the risk/return tradeoff and how it relates to finance.

A limited partner is liable

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

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

Briefly discuss why financial decision makers must focus on incremental cash flows when evaluating new projects.

The agency problem arises due to the separation of ownership and control in a corporation.

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

Share Valuation

Investment Decision Criteria

Analysing 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

If an investor had a choice of receiving $1,000 today or $1,000 in five years,which would the typical investor prefer?

The financial manager should examine available risk-return trade-offs and make his decision based upon the greatest expected return.

The area of finance that deals with long-term investment decisions is known as

For these types of organisation,no distinction is made between business and personal assets.

Which of the following is a characteristic of a limited partnership?

Which of the following best describes the goal of the firm?

General partners have unrestricted transferability of ownership,while limited partners must have the consent of all partners to transfer their ownership.

A sole proprietorship is the most desirable business form in all circumstances.

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

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

Assume that you are starting a business.Further assume that the business is expected to grow very quickly and a great deal of capital will be needed soon.What type of business organisation would you choose?

Managers of corporations need to act in an ethical manner

In a limited partnership,at least one general partner must remain in the association;the privilege of limited liability still applies to this partner.

The major sources of financing for corporations are

Discuss the risk/return tradeoff and how it relates to finance.

A limited partner is liable

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

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

Briefly discuss why financial decision makers must focus on incremental cash flows when evaluating new projects.

The agency problem arises due to the separation of ownership and control in a corporation.

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

Share Valuation

Investment Decision Criteria

Analysing 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