Question 1

The financial manager may be responsible for any of the following EXCEPT

Accepted Answer

A)  determining whether to accept or reject a capital asset acquisition. 
B)  analyzing the effects of more debt on the firm's capital structure. 
C)  analyzing budget and performance reports. 
D)  monitoring of quarterly tax payments.

Question 2

The treasurer is commonly responsible for

Accepted Answer

A)  cost accounting. 
B)  making capital expenditures. 
C)  taxes. 
D)  data processing.

Question 3

If a company's managers are NOT owners of the company, they are

Accepted Answer

A)  outsiders. 
B)  agents. 
C)  brokers. 
D)  dealers.

Question 4

As the risk of a stock investment increases,

Accepted Answer

A)  return will increase. 
B)  required rate of return will increase. 
C)  return will decrease. 
D)  required rate of return will decrease.

Question 5

Return and risk

Accepted Answer

A)  have no effect on share price. 
B)  adversely affect share price. 
C)  have the same effect on share price. 
D)  have an inverse effect on share price.

Question 6

The board of directors is responsible for managing day-to-day operations and carrying out the policies established by the chief executive officer.

Accepted Answer

A) True 
 B)False

Question 7

Corporate owners receive a realizable return through

Accepted Answer

A)  earnings per share and cash dividends. 
B)  profit and earnings per share. 
C)  increase in share price and earnings per share. 
D)  increase in share price and cash dividends.

Question 8

About 75 percent of all business firms are

Accepted Answer

A)  cooperatives. 
B)  partnerships. 
C)  sole proprietorships. 
D)  corporations.

Question 9

For $200,000 you can buy a business that has steady cash flows and low risk. Given these cash flows and level of risk, you estimate the business will earn a return in excess of its opportunity cost of money. The business

Accepted Answer

A)  appears economically profitable, and strong consideration should be given to buying it. 
B)  looks like a break-even opportunity and should be rejected. 
C)  appears to be a losing proposition but should be bought anyway. 
D)  appears to be a losing proposition and should not be bought.

Question 10

The wealth of the owners of a corporation is represented by

Accepted Answer

A)  earnings per share. 
B)  cash flow. 
C)  share price. 
D)  profits.

Question 11

Janice Smith has recently joined the Royal Bank of Canada as a Personal Financial PlannerRepresentative; Janice is working in the area of managerial finance.

Accepted Answer

A) True 
 B)False

Question 12

Finance is concerned with the process institutions, markets, and instruments involved in the transfer of money among and between individuals, businesses and government.

Accepted Answer

A) True 
 B)False

Question 13

In Canada, corporate boards seem to be drawn from a large subset of people representing the cultural differences of Canadians.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is a disadvantage of an income trust?

Accepted Answer

A)  income trusts do not offer the potential for capital appreciation 
B)  income trusts never provide stable cash flows 
C)  only immature companies that do not have a regular cash flow can create income trusts 
D)  unitholders of income trusts have a lower claim on assets than the holders of debt securities

Question 15

Managing the firm's assets includes all of the following EXCEPT

Accepted Answer

A)  notes payable. 
B)  fixed assets. 
C)  inventory. 
D)  accounts receivable.

Question 16

In planning and managing the requirements of the firm, the financial manager is concerned with

Accepted Answer

A)  the mix and type of assets, the type of financing utilized, and analysis in order to monitor the financial condition. 
B)  the acquisition of fixed assets, allowing someone else to plan the level of current assets required. 
C)  the type of financing utilized, but not the mix and type of assets. 
D)  the mix and type of assets, but not the type of financing utilized.

Question 17

To achieve the goal of profit maximization, for each alternative being considered, the financial manager would select the one that is expected to result in the highest monetary return.

Accepted Answer

A) True 
 B)False

Question 18

The profit maximization goal ignores the timing of returns, does not directly consider cash flows, and ignores risk.

Accepted Answer

A) True 
 B)False

Question 19

A firm has just ended its calendar year making a sale in the amount of $150,000 of merchandisepurchased during the year at a total cost of $112,500. Although the firm paid in full for themerchandise during the year, it has yet to collect at year end from the customer. The net profit and cash flow from this sale for the year are

Accepted Answer

A)  $37,500 and -$112,500 respectively. 
B)  $150,000 and $112,500 respectively. 
C)  $0 and $150,000 respectively. 
D)  $37,500 and -$150,000 respectively.

Question 20

Managerial finance is concerned with the design and delivery of advice and financial products toindividuals, businesses, and government.

Accepted Answer

A) True 
 B)False

Exam 1: Overview of Corporate Finance

The financial manager may be responsible for any of the following EXCEPT

The treasurer is commonly responsible for

If a company's managers are NOT owners of the company, they are

As the risk of a stock investment increases,

Return and risk

The board of directors is responsible for managing day-to-day operations and carrying out the policies established by the chief executive officer.

Corporate owners receive a realizable return through

About 75 percent of all business firms are

For $200,000 you can buy a business that has steady cash flows and low risk. Given these cash flows and level of risk, you estimate the business will earn a return in excess of its opportunity cost of money. The business

The wealth of the owners of a corporation is represented by

Janice Smith has recently joined the Royal Bank of Canada as a Personal Financial PlannerRepresentative; Janice is working in the area of managerial finance.

Finance is concerned with the process institutions, markets, and instruments involved in the transfer of money among and between individuals, businesses and government.

In Canada, corporate boards seem to be drawn from a large subset of people representing the cultural differences of Canadians.

Which of the following is a disadvantage of an income trust?

Managing the firm's assets includes all of the following EXCEPT

In planning and managing the requirements of the firm, the financial manager is concerned with

To achieve the goal of profit maximization, for each alternative being considered, the financial manager would select the one that is expected to result in the highest monetary return.

The profit maximization goal ignores the timing of returns, does not directly consider cash flows, and ignores risk.

Managerial finance is concerned with the design and delivery of advice and financial products toindividuals, businesses, and government.