Question 1

Profit maximisation is not an adequate goal of the firm when making financial decisions because

Accepted Answer

A) it does not necessarily reflect shareholder wealth maximisation. 
B) it ignores the risk inherent in different projects that will generate the profits. 
C) it ignores the timing of a project's returns. 
D) all of the above are correct. 
A) it does not necessarily reflect shareholder wealth maximisation. 
B) it ignores the risk inherent in different projects that will generate the profits. 
C) it ignores the timing of a project's returns. 
D) all of the above are correct.

Question 2

Which of the following is a characteristic of an efficient market?

Accepted Answer

A) There are small numbers of individuals. 
B) Opportunities exist for investors to profit from publicly available information. 
C) The market prices of securities reflect fair value of the firm. 
D) Immediate responses occur for new public information. 
A) There are small numbers of individuals. 
B) Opportunities exist for investors to profit from publicly available information. 
C) The market prices of securities reflect fair value of the firm. 
D) Immediate responses occur for new public information.

Question 3

The Sarbanes-Oxley Act primarily addresses insider trading.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following statements best represents what finance is about?

Accepted Answer

A) How political,social,and economic forces affect corporations 
B) Maximizing profits 
C) The study of how people and businesses make investment decisions and how to finance those decisions 
D) Reducing risk 
A) How political,social,and economic forces affect corporations 
B) Maximizing profits 
C) The study of how people and businesses make investment decisions and how to finance those decisions 
D) Reducing risk

Question 5

Which of the following is a significant disadvantage of a general partnership?

Accepted Answer

A) The cost of forming it is high. 
B) Each partner is fully responsible for the liabilities incurred by the partnership. 
C) There is a risk associated with the industry in which it operates. 
D) Forming the business is very complex. 
A) The cost of forming it is high. 
B) Each partner is fully responsible for the liabilities incurred by the partnership. 
C) There is a risk associated with the industry in which it operates. 
D) Forming the business is very complex.

Question 6

Which of the following is NOT true for limited partnerships?

Accepted Answer

A) Limited partners can only manage the business. 
B) One general partner must exist who has unlimited liability. 
C) Only the name of general partners can appear in the name of the firm. 
D) Limited partners may sell their interest in the company. 
A) Limited partners can only manage the business. 
B) One general partner must exist who has unlimited liability. 
C) Only the name of general partners can appear in the name of the firm. 
D) Limited partners may sell their interest in the company.

Question 7

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 8

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 9

The term,shareholder,applies to a

Accepted Answer

A) general partner. 
B) creditor. 
C) corporate owner. 
D) proprietor. 
A) general partner. 
B) creditor. 
C) corporate owner. 
D) proprietor.

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

If managers are making decisions to maximise shareholder wealth,then they are primarily concerned with making decisions that should

Accepted Answer

A) positively affect short term profits at the expense of long term profits. 
B) increase the market value of the firm's stock. 
C) have no effect on the value of the firm's stock. 
D) accomplish all of the above. 
A) positively affect short term profits at the expense of long term profits. 
B) increase the market value of the firm's stock. 
C) have no effect on the value of the firm's stock. 
D) accomplish all of the above.

Question 12

The goal of profit maximisation ignores the timing of profit.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following forms of organisation blends elements of partnerships and corporations?

Accepted Answer

A) managing partnerships 
B) sole proprietorships 
C) limited liability companies 
D) general partnerships 
A) managing partnerships 
B) sole proprietorships 
C) limited liability companies 
D) general partnerships

Question 14

Why do you think many companies compensate executives with options based on long-term increases in the value of the company's stock?

Accepted Answer

Tying executive compensation to long-ter

Question 15

Business financial decisions are fundamentally different from personal financial decisions.

Accepted Answer

A) True 
 B)False

Question 16

Ultimate control in a corporation is vested in the board of directors.

Accepted Answer

A) True 
 B)False

Question 17

In measuring value,the focus should be on

Accepted Answer

A) cash flow. 
B) accounting profits. 
C) time value of money. 
D) earnings per share. 
A) cash flow. 
B) accounting profits. 
C) time value of money. 
D) earnings per share.

Question 18

What is the chief disadvantage of the sole proprietorship as a form of business organisation when compared to the corporate form?

Accepted Answer

A) Sole proprietorships are subject to double taxation of profits. 
B) The cost of formation. 
C) Inadequate profit sharing. 
D) Owners have unlimited liability. 
A) Sole proprietorships are subject to double taxation of profits. 
B) The cost of formation. 
C) Inadequate profit sharing. 
D) Owners have unlimited liability.

Question 19

Financial management skills are not just needed by finance professionals,they are also needed by

Accepted Answer

A) marketing managers. 
B) accountants. 
C) management information systems professionals. 
D) all of the above. 
A) marketing managers. 
B) accountants. 
C) management information systems professionals. 
D) all of the above.

Question 20

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.

Profit maximisation is not an adequate goal of the firm when making financial decisions because

Which of the following is a characteristic of an efficient market?

The Sarbanes-Oxley Act primarily addresses insider trading.

Which of the following statements best represents what finance is about?

Which of the following is a significant disadvantage of a general partnership?

Which of the following is NOT true for limited partnerships?

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

A corporation is owned by

The term,shareholder,applies to a

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

If managers are making decisions to maximise shareholder wealth,then they are primarily concerned with making decisions that should

The goal of profit maximisation ignores the timing of profit.

Which of the following forms of organisation blends elements of partnerships and corporations?

Why do you think many companies compensate executives with options based on long-term increases in the value of the company's stock?

Business financial decisions are fundamentally different from personal financial decisions.

Ultimate control in a corporation is vested in the board of directors.

In measuring value,the focus should be on

What is the chief disadvantage of the sole proprietorship as a form of business organisation when compared to the corporate form?

Financial management skills are not just needed by finance professionals,they are also needed by

In finance,we assume that investors are generally

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

Profit maximisation is not an adequate goal of the firm when making financial decisions because

Which of the following is a characteristic of an efficient market?

The Sarbanes-Oxley Act primarily addresses insider trading.

Which of the following statements best represents what finance is about?

Which of the following is a significant disadvantage of a general partnership?

Which of the following is NOT true for limited partnerships?

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

A corporation is owned by

The term,shareholder,applies to a

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

If managers are making decisions to maximise shareholder wealth,then they are primarily concerned with making decisions that should

The goal of profit maximisation ignores the timing of profit.

Which of the following forms of organisation blends elements of partnerships and corporations?

Why do you think many companies compensate executives with options based on long-term increases in the value of the company's stock?

Business financial decisions are fundamentally different from personal financial decisions.

Ultimate control in a corporation is vested in the board of directors.

In measuring value,the focus should be on

What is the chief disadvantage of the sole proprietorship as a form of business organisation when compared to the corporate form?

Financial management skills are not just needed by finance professionals,they are also needed by

In finance,we assume that investors are generally

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