Question 1

Which of the following statements regarding wealth maximisation is true?

Accepted Answer

A)  Wealth maximisation uses a short-run perspective of the business. 
B)  Wealth maximisation ignores future cash flows. 
C)  Wealth maximisation considers the time value of money. 
D)  None of the above. 
A)  Wealth maximisation uses a short-run perspective of the business. 
B)  Wealth maximisation ignores future cash flows. 
C)  Wealth maximisation considers the time value of money. 
D)  None of the above. C

Question 2

At the ___________ level, finances influence the fiscal position of the nation and influence living standards.

Accepted Answer

A)  macro. 
B)  government. 
C)  micro. 
D)  business entity. 
A)  macro. 
B)  government. 
C)  micro. 
D)  business entity. B

Question 3

Management decisions that directly affect the company's expected cash flows include all of the following except:

Accepted Answer

A)  product quality and cost. 
B)  corporate laws. 
C)  research and development. 
D)  marketing and sales. 
A)  product quality and cost. 
B)  corporate laws. 
C)  research and development. 
D)  marketing and sales. B

Question 4

Maximisation of the owners' wealth:

Accepted Answer

A)  takes risk into consideration. 
B)  uses a short-term view. 
C)  relies on accounting numbers. 
D)  fails to consider the time value of money. 
A)  takes risk into consideration. 
B)  uses a short-term view. 
C)  relies on accounting numbers. 
D)  fails to consider the time value of money.

Question 5

In our society, ethical rules do not include:

Accepted Answer

A)  realising that we must follow the same rules we expect others to follow. 
B)  considering the impact of our actions on others. 
C)  being unwilling to sometimes put the interest of others ahead of our own interests. 
D)  all of the above. 
A)  realising that we must follow the same rules we expect others to follow. 
B)  considering the impact of our actions on others. 
C)  being unwilling to sometimes put the interest of others ahead of our own interests. 
D)  all of the above.

Question 6

The _____________ works out the best way to structure finances and make effective financial decisions.

Accepted Answer

A)  Finance manager. 
B)  Controller. 
C)  CEO. 
D)  Risk manager. 
A)  Finance manager. 
B)  Controller. 
C)  CEO. 
D)  Risk manager.

Question 7

The only corporate objective that maximises the economic interests of all stakeholders over a long-term horizon is for management to:

Accepted Answer

A)  expand business operations. 
B)  make decisions that maximise the wealth of shareholders. 
C)  maintain financial strength. 
D)  retain financial flexibility. 
A)  expand business operations. 
B)  make decisions that maximise the wealth of shareholders. 
C)  maintain financial strength. 
D)  retain financial flexibility.

Question 8

_________________ have access to more capital, and pooling of knowledge, experience and skills than sole traders.

Accepted Answer

A)  Public companies. 
B)  Private companies. 
C)  Partnerships. 
D)  All of the above. 
A)  Public companies. 
B)  Private companies. 
C)  Partnerships. 
D)  All of the above.

Question 9

Information asymmetry occurs when:

Accepted Answer

A)  both parties have access to the same information. 
B)  the seller has more information than the buyer. 
C)  insider trading. 
D)  B and C 
A)  both parties have access to the same information. 
B)  the seller has more information than the buyer. 
C)  insider trading. 
D)  B and C

Question 10

Why don't many small businesses employ a financial manager?

Accepted Answer

A)  costs outweigh benefits. 
B)  high cost. 
C)  limited benefits. 
D)  none of the above. 
A)  costs outweigh benefits. 
B)  high cost. 
C)  limited benefits. 
D)  none of the above.

Question 11

Typically, conflicts of interest are resolved by:

Accepted Answer

A)  complete disclosure. 
B)  nondisclosure. 
C)  withdrawing from serving one of the parties. 
D)  A and C 
A)  complete disclosure. 
B)  nondisclosure. 
C)  withdrawing from serving one of the parties. 
D)  A and C

Question 12

Which of the following looks after the collection and disbursement of cash?

Accepted Answer

A)  Internal auditor. 
B)  Risk manager. 
C)  Controller. 
D)  Treasurer. 
A)  Internal auditor. 
B)  Risk manager. 
C)  Controller. 
D)  Treasurer.

Question 13

The CFO reports directly to the:

Accepted Answer

A)  Board of directors. 
B)  Audit committee. 
C)  CEO. 
D)  External auditor. 
A)  Board of directors. 
B)  Audit committee. 
C)  CEO. 
D)  External auditor.

Question 14

Which party of a bond pays the repayment of the face value at maturity?

Accepted Answer

A)  issuer. 
B)  owner. 
C)  financial intermediary. 
D)  none of the above. 
A)  issuer. 
B)  owner. 
C)  financial intermediary. 
D)  none of the above.

Question 15

The decision-making process through which managers choose long-term productive assets is known as:

Accepted Answer

A)  productive decisions. 
B)  financing decisions. 
C)  capital budgeting decisions. 
D)  all of the above. 
A)  productive decisions. 
B)  financing decisions. 
C)  capital budgeting decisions. 
D)  all of the above.

Question 16

In the financing decision process, managers decide whether to use:

Accepted Answer

A)  equity. 
B)  debt and equity. 
C)  debt. 
D)  none of the above. 
A)  equity. 
B)  debt and equity. 
C)  debt. 
D)  none of the above.

Question 17

The _____________ reports directly to the CFO.

Accepted Answer

A)  External auditor. 
B)  CEO. 
C)  Risk manager. 
D)  Audit committee. 
A)  External auditor. 
B)  CEO. 
C)  Risk manager. 
D)  Audit committee.

Question 18

For consumers, finance influences:

Accepted Answer

A)  ability to make effective financial decisions. 
B)  accumulation of wealth over the long term. 
C)  profitability and living standards. 
D)  A and B 
A)  ability to make effective financial decisions. 
B)  accumulation of wealth over the long term. 
C)  profitability and living standards. 
D)  A and B

Question 19

Incentives provided by law and market forces to foster ethical behaviour:

Accepted Answer

A)  are not enough to ensure ethical behaviour. 
B)  make an ethical business culture unnecessary. 
C)  are sufficient to ensure ethical behaviour. 
D)  none of the above. 
A)  are not enough to ensure ethical behaviour. 
B)  make an ethical business culture unnecessary. 
C)  are sufficient to ensure ethical behaviour. 
D)  none of the above.

Question 20

The ___________ prepares the financial statements and tax returns.

Accepted Answer

A)  Treasurer. 
B)  Risk manager. 
C)  Controller. 
D)  Internal auditor. 
A)  Treasurer. 
B)  Risk manager. 
C)  Controller. 
D)  Internal auditor.

Which of the following statements regarding wealth maximisation is true?

At the ___________ level, finances influence the fiscal position of the nation and influence living standards.

Management decisions that directly affect the company's expected cash flows include all of the following except:

Maximisation of the owners' wealth:

In our society, ethical rules do not include:

The _____________ works out the best way to structure finances and make effective financial decisions.

The only corporate objective that maximises the economic interests of all stakeholders over a long-term horizon is for management to:

_________________ have access to more capital, and pooling of knowledge, experience and skills than sole traders.

Information asymmetry occurs when:

Why don't many small businesses employ a financial manager?

Typically, conflicts of interest are resolved by:

Which of the following looks after the collection and disbursement of cash?

The CFO reports directly to the:

Which party of a bond pays the repayment of the face value at maturity?

The decision-making process through which managers choose long-term productive assets is known as:

In the financing decision process, managers decide whether to use:

The _____________ reports directly to the CFO.

For consumers, finance influences:

Incentives provided by law and market forces to foster ethical behaviour:

The ___________ prepares the financial statements and tax returns.

Time Value of Money, Financial Markets, the Reserve Bank of Australia and Interest Rates

Discounted Cash Flows and Valuation

Risk and Return

Share Valuation and Bond Valuation

Capital Budgeting and Cash Flows

Cost of Capital and Working Capital Management

Capital Structure and Dividend Policy

Filters

Exam 1: Finance in Business

Which of the following statements regarding wealth maximisation is true?

At the ___________ level, finances influence the fiscal position of the nation and influence living standards.

Management decisions that directly affect the company's expected cash flows include all of the following except:

Maximisation of the owners' wealth:

In our society, ethical rules do not include:

The _____________ works out the best way to structure finances and make effective financial decisions.

The only corporate objective that maximises the economic interests of all stakeholders over a long-term horizon is for management to:

_________________ have access to more capital, and pooling of knowledge, experience and skills than sole traders.

Information asymmetry occurs when:

Why don't many small businesses employ a financial manager?

Typically, conflicts of interest are resolved by:

Which of the following looks after the collection and disbursement of cash?

The CFO reports directly to the:

Which party of a bond pays the repayment of the face value at maturity?

The decision-making process through which managers choose long-term productive assets is known as:

In the financing decision process, managers decide whether to use:

The _____________ reports directly to the CFO.

For consumers, finance influences:

Incentives provided by law and market forces to foster ethical behaviour:

The ___________ prepares the financial statements and tax returns.

Time Value of Money, Financial Markets, the Reserve Bank of Australia and Interest Rates

Discounted Cash Flows and Valuation

Risk and Return

Share Valuation and Bond Valuation

Capital Budgeting and Cash Flows

Cost of Capital and Working Capital Management

Capital Structure and Dividend Policy

Filters