Question 1

Only a few financial decisions involve some sort of risk-return tradeoff.

Accepted Answer

A) True 
 B)False

Question 2

The true owners of a corporation are the

Accepted Answer

A) holders of debt issues. 
B) preferred stockholders. 
C) board of directors. 
D) common shareholders. 
A) holders of debt issues. 
B) preferred stockholders. 
C) board of directors. 
D) common shareholders.

Question 3

Why do investors prefer receiving cash sooner rather than later,according to finance theory?

Accepted Answer

A) Incremental profits are greater than accounting profits. 
B) Money received earlier can be reinvested and returns can be increased. 
C) Tax considerations are important when investing. 
D) Diversification leads to increased value. 
A) Incremental profits are greater than accounting profits. 
B) Money received earlier can be reinvested and returns can be increased. 
C) Tax considerations are important when investing. 
D) Diversification leads to increased value.

Question 4

Foregoing the earning potential of a dollar today is referred to as the

Accepted Answer

A) time value of money. 
B) opportunity cost concept. 
C) risk/return tradeoff. 
D) creation of wealth. 
A) time value of money. 
B) opportunity cost concept. 
C) risk/return tradeoff. 
D) creation of wealth.

Question 5

The goal of profit maximisation is equivalent to the goal of maximisation of share value.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

In a general partnership,each partner is liable for the partnership's obligations only up to a percentage of the obligation equal to that partner's percentage of ownership of the partnership.

Accepted Answer

A) True 
 B)False

Question 8

The cost to create a business is usually the lowest for the sole proprietorship.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) profit maximisation 
B) risk minimisation 
C) maximising the market value of shareholders' stock 
D) maximising sales revenues 
A) profit maximisation 
B) risk minimisation 
C) maximising the market value of shareholders' stock 
D) maximising sales revenues

Question 10

In efficient markets,price adjustments to new information are gradual.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following factors is most important in investment decisions?

Accepted Answer

A) the change in earnings before taxes 
B) the change in gross sales revenue 
C) the change in net income 
D) the change in cash flow 
A) the change in earnings before taxes 
B) the change in gross sales revenue 
C) the change in net income 
D) the change in cash flow

Question 12

If managers do not pursue the goal of maximising 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 13

Working capital management refers to

Accepted Answer

A) long-term financing decisions. 
B) the management of cash flows. 
C) investing in product development. 
D) capital structure. 
A) long-term financing decisions. 
B) the management of cash flows. 
C) investing in product development. 
D) capital structure.

Question 14

The price of Netflix stock dropped sharply after customers responded negatively to a change in pricing policies.The change in stock price illustrates which principle?

Accepted Answer

A) Market prices reflect information. 
B) Individuals respond to incentives. 
C) Cash flows are the source of value. 
D) The time-value of money. 
A) Market prices reflect information. 
B) Individuals respond to incentives. 
C) Cash flows are the source of value. 
D) The time-value of money.

Question 15

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 16

In terms of organisational costs,which of the following sequences are generally correct,moving from lowest to highest cost?

Accepted Answer

A) General partnership,sole proprietorship,limited partnership,corporation 
B) Sole proprietorship,general partnership,limited partnership,corporation 
C) Corporation,limited partnership,general partnership,sole proprietorship 
D) Sole proprietorship,general partnership,corporation,limited partnership 
A) General partnership,sole proprietorship,limited partnership,corporation 
B) Sole proprietorship,general partnership,limited partnership,corporation 
C) Corporation,limited partnership,general partnership,sole proprietorship 
D) Sole proprietorship,general partnership,corporation,limited partnership

Question 17

Which of the following should be considered when assessing the financial impact of business decisions?

Accepted Answer

A) The amount of projected earnings 
B) The risk-return tradeoff 
C) The timing of projected earnings;i.e. ,when they are expected to occur 
D) All of the above 
A) The amount of projected earnings 
B) The risk-return tradeoff 
C) The timing of projected earnings;i.e. ,when they are expected to occur 
D) All of the above

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

Investors prefer $1 today versus $1 in the future due to

Accepted Answer

A) time value of money. 
B) response to incentives. 
C) the need for immediate gratification. 
D) A and B. 
A) time value of money. 
B) response to incentives. 
C) the need for immediate gratification. 
D) A and B.

Question 20

Which of the following types of business forms is least risky to investors?

Accepted Answer

A) Sole proprietorship 
B) Limited partnership 
C) General partnership 
D) A public corporation 
A) Sole proprietorship 
B) Limited partnership 
C) General partnership 
D) A public corporation

Only a few financial decisions involve some sort of risk-return tradeoff.

The true owners of a corporation are the

Why do investors prefer receiving cash sooner rather than later,according to finance theory?

Foregoing the earning potential of a dollar today is referred to as the

The goal of profit maximisation is equivalent to the goal of maximisation of share value.

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

In a general partnership,each partner is liable for the partnership's obligations only up to a percentage of the obligation equal to that partner's percentage of ownership of the partnership.

The cost to create a business is usually the lowest for the sole proprietorship.

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

In efficient markets,price adjustments to new information are gradual.

Which of the following factors is most important in investment decisions?

If managers do not pursue the goal of maximising shareholder wealth

Working capital management refers to

The price of Netflix stock dropped sharply after customers responded negatively to a change in pricing policies.The change in stock price illustrates which principle?

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

In terms of organisational costs,which of the following sequences are generally correct,moving from lowest to highest cost?

Which of the following should be considered when assessing the financial impact of business decisions?

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

Investors prefer $1 today versus $1 in the future due to

Which of the following types of business forms is least risky to investors?

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

Only a few financial decisions involve some sort of risk-return tradeoff.

The true owners of a corporation are the

Why do investors prefer receiving cash sooner rather than later,according to finance theory?

Foregoing the earning potential of a dollar today is referred to as the

The goal of profit maximisation is equivalent to the goal of maximisation of share value.

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

In a general partnership,each partner is liable for the partnership's obligations only up to a percentage of the obligation equal to that partner's percentage of ownership of the partnership.

The cost to create a business is usually the lowest for the sole proprietorship.

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

In efficient markets,price adjustments to new information are gradual.

Which of the following factors is most important in investment decisions?

If managers do not pursue the goal of maximising shareholder wealth

Working capital management refers to

The price of Netflix stock dropped sharply after customers responded negatively to a change in pricing policies.The change in stock price illustrates which principle?

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

In terms of organisational costs,which of the following sequences are generally correct,moving from lowest to highest cost?

Which of the following should be considered when assessing the financial impact of business decisions?

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

Investors prefer $1 today versus $1 in the future due to

Which of the following types of business forms is least risky to investors?

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