Question 1

A mission statement reflects a company's

Accepted Answer

A)  Short-term objectives 
B)  Ultimate purpose 
C)  Fundamental strategies 
D)  Operational tactics 
E)  Promises to customers 
A)  Short-term objectives 
B)  Ultimate purpose 
C)  Fundamental strategies 
D)  Operational tactics 
E)  Promises to customers B

Question 2

The Sarbanes-Oxley Act requires senior executives of companies to

Accepted Answer

A)  Ensure the confidentiality and privacy of financial information 
B)  Provide a code of ethics for employees 
C)  Ensure all financial statements are audited 
D)  Provide full and fair disclosure of all financial agreements 
E)  Certify the effectiveness of internal controls against fraud 
A)  Ensure the confidentiality and privacy of financial information 
B)  Provide a code of ethics for employees 
C)  Ensure all financial statements are audited 
D)  Provide full and fair disclosure of all financial agreements 
E)  Certify the effectiveness of internal controls against fraud E

Question 3

A mission statement often includes

Accepted Answer

A)  Commitment to shareholders 
B)  Target values for return on investment 
C)  Plans for new product/service offerings 
D)  Names of corporate directors 
E)  Declaration of future earnings 
A)  Commitment to shareholders 
B)  Target values for return on investment 
C)  Plans for new product/service offerings 
D)  Names of corporate directors 
E)  Declaration of future earnings A

Question 4

Shareholder activism can be most often seen at work by

Accepted Answer

A)  Shareholders voting by proxy for annual meeting resolutions 
B)  Shareholders attending annual meeting and voting on resolutions 
C)  Insurance companies voting on resolutions at annual meetings 
D)  Executive directors voting for a pay raise at annual meetings 
E)  Head office protests and sit-ins by anti-poverty groups 
A)  Shareholders voting by proxy for annual meeting resolutions 
B)  Shareholders attending annual meeting and voting on resolutions 
C)  Insurance companies voting on resolutions at annual meetings 
D)  Executive directors voting for a pay raise at annual meetings 
E)  Head office protests and sit-ins by anti-poverty groups

Question 5

TRW Corp. hired a new CEO and agreed to pay her $20,000 plus stock options for 1 million shares annually, hoping this would provide a huge incentive for the CEO to turn the company's fortunes around. Which of the following events might act as a disincentive for the new CEO?

Accepted Answer

A)  the personal marginal tax rate decreased slightly 
B)  interest rates increased by 3% during the year 
C)  inflation rates fell a bit during the year 
D)  sales opportunities arose in a foreign country 
E)  a new company started to compete against TRW 
A)  the personal marginal tax rate decreased slightly 
B)  interest rates increased by 3% during the year 
C)  inflation rates fell a bit during the year 
D)  sales opportunities arose in a foreign country 
E)  a new company started to compete against TRW

Question 6

Capital markets play an important role in

Accepted Answer

A)  Curbing inflation 
B)  Setting fiscal policy in Canada 
C)  Setting interest rates 
D)  Evaluating business performance through share price 
E)  Reducing risks and increasing returns to investors 
A)  Curbing inflation 
B)  Setting fiscal policy in Canada 
C)  Setting interest rates 
D)  Evaluating business performance through share price 
E)  Reducing risks and increasing returns to investors

Question 7

According to a Robert Half International Inc. survey, the most likely impact of increased corporate governance will be

Accepted Answer

A)  increased staff turnover 
B)  better ethical environment 
C)  more deadline pressure 
D)  better opportunities 
E)  accounting/IT collaboration 
A)  increased staff turnover 
B)  better ethical environment 
C)  more deadline pressure 
D)  better opportunities 
E)  accounting/IT collaboration

Question 8

Orbit Ltd. has 30,000 shares outstanding and earned $30,000 on capital invested of $90,000 last year. What is the likely impact of an investment opportunity to issue 10,000 more shares for $30,000 to earn an additional $14,000?

Accepted Answer

A)  EPS will decrease and the stock price will fall 
B)  the new investment is relatively less profitable 
C)  the new investment is relatively more profitable 
D)  total profits will increase slightly but by not enough 
E)  the new capital invested will earn less per dollar 
A)  EPS will decrease and the stock price will fall 
B)  the new investment is relatively less profitable 
C)  the new investment is relatively more profitable 
D)  total profits will increase slightly but by not enough 
E)  the new capital invested will earn less per dollar

Question 9

A group that is a stakeholder in a business is

Accepted Answer

A)  Any group having an interest in that business 
B)  Any group having a financial interest in that business 
C)  Comprised of only its common shareholders and lenders 
D)  Comprised of only its common shareholders and managers 
E)  Any group external to a business with a financial interest in it 
A)  Any group having an interest in that business 
B)  Any group having a financial interest in that business 
C)  Comprised of only its common shareholders and lenders 
D)  Comprised of only its common shareholders and managers 
E)  Any group external to a business with a financial interest in it

Question 10

The company is performing the function of financial control when it

Accepted Answer

A)  Raises funds from capital markets 
B)  Takes corrective action to achieve business goals 
C)  Assesses the riskiness of investment projects 
D)  Identifies possible sources of funds 
E)  Reinvests profits from operations 
A)  Raises funds from capital markets 
B)  Takes corrective action to achieve business goals 
C)  Assesses the riskiness of investment projects 
D)  Identifies possible sources of funds 
E)  Reinvests profits from operations

Question 11

Bonuses paid to banking executives whose corporate share prices declined significantly during the Great Recession of 2008 were an example of

Accepted Answer

A)  Greed by bankers 
B)  The agency problem 
C)  The failure of capitalism 
D)  Poor government oversight 
E)  Stock market risk 
A)  Greed by bankers 
B)  The agency problem 
C)  The failure of capitalism 
D)  Poor government oversight 
E)  Stock market risk

Question 12

A key principle underlying modern financial management is that the primary objective of a business is

Accepted Answer

A)  Profit maximization 
B)  Minimization of costs 
C)  Minimization of government regulation 
D)  Shareholder wealth maximization 
E)  Marketshare maximization 
A)  Profit maximization 
B)  Minimization of costs 
C)  Minimization of government regulation 
D)  Shareholder wealth maximization 
E)  Marketshare maximization

Question 13

Penrod Autoservice Ltd. has 200,000 common shares at a market value of $10 per share, and a net income after tax of $90,000. The company would like to issue 30,000 more shares at $10 per share. How much income after tax will the company have to earn to maintain current shareholders' wealth?

Accepted Answer

A)  $22,500 
B)  $103,500 
C)  $112,500 
D)  $120,000 
E)  $199,500 
A)  $22,500 
B)  $103,500 
C)  $112,500 
D)  $120,000 
E)  $199,500

Question 14

The guiding principle that deals with adequate and timely information about corporate performance is called

Accepted Answer

A)  Accountability 
B)  Fairness 
C)  DueProcess 
D)  Transparency 
E)  Disclosure 
A)  Accountability 
B)  Fairness 
C)  DueProcess 
D)  Transparency 
E)  Disclosure

Question 15

Pressure to increase returns to shareholders has

Accepted Answer

A)  Grown in response to fewer global investment opportunities 
B)  Grown due to the relative ease of moving funds to any opportunity in the world 
C)  Not changed in the past decade 
D)  Decreased because of the stability of the North American economy 
E)  Decreased in response to availability of better information through technology 
A)  Grown in response to fewer global investment opportunities 
B)  Grown due to the relative ease of moving funds to any opportunity in the world 
C)  Not changed in the past decade 
D)  Decreased because of the stability of the North American economy 
E)  Decreased in response to availability of better information through technology

Question 16

Diversification of investments refer to

Accepted Answer

A)  buying several investments 
B)  saving up for a rainy day 
C)  buying shares in a company 
D)  buying government backed bonds 
E)  keeping your money in the bank 
A)  buying several investments 
B)  saving up for a rainy day 
C)  buying shares in a company 
D)  buying government backed bonds 
E)  keeping your money in the bank

Question 17

If maximizing shareholder wealth is a prime objective for the McDonald's hamburger chain, donating $500,000 to build an opera house in Winnipeg would be most consistent with the goal if it

Accepted Answer

A)  Contributed to betterment of the arts community in the city 
B)  Provided income tax relief equal to 25% of the contribution 
C)  Provided shareholders with the opportunity to enjoy fine living arts 
D)  Increased visitors to the community who may spend money at McDonald's 
E)  Enhanced the corporate image of McDonald's with leading citizens 
A)  Contributed to betterment of the arts community in the city 
B)  Provided income tax relief equal to 25% of the contribution 
C)  Provided shareholders with the opportunity to enjoy fine living arts 
D)  Increased visitors to the community who may spend money at McDonald's 
E)  Enhanced the corporate image of McDonald's with leading citizens

Question 18

________ is used to describe that the ways in which companies are directed and controlled.

Accepted Answer

A)  Agency Agreement 
B)  Mission Statement 
C)  Incorporation Resolutions 
D)  Corporate Governance 
E)  Annual Report 
A)  Agency Agreement 
B)  Mission Statement 
C)  Incorporation Resolutions 
D)  Corporate Governance 
E)  Annual Report

Question 19

Last year, the EPS, for 250,000 shares outstanding was $4, for a company with invested capital of $21 million. What was the Company's net income that year?

Accepted Answer

A)  $84,000,000 
B)  $5,250,000 
C)  $1,000,000 
D)  $336,000 
E)  $62,500 
A)  $84,000,000 
B)  $5,250,000 
C)  $1,000,000 
D)  $336,000 
E)  $62,500

Question 20

Prendle-Robinson Inc., has capital invested of $1,200,000 on 50,000 common shares outstanding. If the Company's net income for the year was $144,000, the company's EPS, Earnings Per Share, rounded to two decimal places is

Accepted Answer

A)  $.12 
B)  $.35 
C)  $2.88 
D)  $8.33 
E)  $24 
A)  $.12 
B)  $.35 
C)  $2.88 
D)  $8.33 
E)  $24

A mission statement reflects a company's

The Sarbanes-Oxley Act requires senior executives of companies to

A mission statement often includes

Shareholder activism can be most often seen at work by

TRW Corp. hired a new CEO and agreed to pay her $20,000 plus stock options for 1 million shares annually, hoping this would provide a huge incentive for the CEO to turn the company's fortunes around. Which of the following events might act as a disincentive for the new CEO?

Capital markets play an important role in

According to a Robert Half International Inc. survey, the most likely impact of increased corporate governance will be

Orbit Ltd. has 30,000 shares outstanding and earned $30,000 on capital invested of $90,000 last year. What is the likely impact of an investment opportunity to issue 10,000 more shares for $30,000 to earn an additional $14,000?

A group that is a stakeholder in a business is

The company is performing the function of financial control when it

Bonuses paid to banking executives whose corporate share prices declined significantly during the Great Recession of 2008 were an example of

A key principle underlying modern financial management is that the primary objective of a business is

Penrod Autoservice Ltd. has 200,000 common shares at a market value of $10 per share, and a net income after tax of $90,000. The company would like to issue 30,000 more shares at $10 per share. How much income after tax will the company have to earn to maintain current shareholders' wealth?

The guiding principle that deals with adequate and timely information about corporate performance is called

Pressure to increase returns to shareholders has

Diversification of investments refer to

If maximizing shareholder wealth is a prime objective for the McDonald's hamburger chain, donating $500,000 to build an opera house in Winnipeg would be most consistent with the goal if it

________ is used to describe that the ways in which companies are directed and controlled.

Last year, the EPS, for 250,000 shares outstanding was $4, for a company with invested capital of $21 million. What was the Company's net income that year?

Prendle-Robinson Inc., has capital invested of $1,200,000 on 50,000 common shares outstanding. If the Company's net income for the year was $144,000, the company's EPS, Earnings Per Share, rounded to two decimal places is

Accounting - the Language of Business

Financial Planning and Pro Forma Financial Statements

Analyzing and Interpreting Financial Statements

The Time Value of Money

Making Capital Investment Decisions

Making Capital Investment Decisions: Further Issues

Financing a Business 1: Sources of Funds

Financing a Business 2: Raising Long-Term Funds

The Cost of Capital and the Capital Structure Decision

Developing a Dividend Policy

Managing Working Capital

Measuring and Managing for Shareholder Value

Mergers, Acquisitions, and the Valuation of Shares

Filters

Exam 1: Introduction to Financial Management

A mission statement reflects a company's

The Sarbanes-Oxley Act requires senior executives of companies to

A mission statement often includes

Shareholder activism can be most often seen at work by

TRW Corp. hired a new CEO and agreed to pay her $20,000 plus stock options for 1 million shares annually, hoping this would provide a huge incentive for the CEO to turn the company's fortunes around. Which of the following events might act as a disincentive for the new CEO?

Capital markets play an important role in

According to a Robert Half International Inc. survey, the most likely impact of increased corporate governance will be

Orbit Ltd. has 30,000 shares outstanding and earned $30,000 on capital invested of $90,000 last year. What is the likely impact of an investment opportunity to issue 10,000 more shares for $30,000 to earn an additional $14,000?

A group that is a stakeholder in a business is

The company is performing the function of financial control when it

Bonuses paid to banking executives whose corporate share prices declined significantly during the Great Recession of 2008 were an example of

A key principle underlying modern financial management is that the primary objective of a business is

Penrod Autoservice Ltd. has 200,000 common shares at a market value of $10 per share, and a net income after tax of $90,000. The company would like to issue 30,000 more shares at $10 per share. How much income after tax will the company have to earn to maintain current shareholders' wealth?

The guiding principle that deals with adequate and timely information about corporate performance is called

Pressure to increase returns to shareholders has

Diversification of investments refer to

If maximizing shareholder wealth is a prime objective for the McDonald's hamburger chain, donating $500,000 to build an opera house in Winnipeg would be most consistent with the goal if it

________ is used to describe that the ways in which companies are directed and controlled.

Last year, the EPS, for 250,000 shares outstanding was $4, for a company with invested capital of $21 million. What was the Company's net income that year?

Prendle-Robinson Inc., has capital invested of $1,200,000 on 50,000 common shares outstanding. If the Company's net income for the year was $144,000, the company's EPS, Earnings Per Share, rounded to two decimal places is

Accounting - the Language of Business

Financial Planning and Pro Forma Financial Statements

Analyzing and Interpreting Financial Statements

The Time Value of Money

Making Capital Investment Decisions

Making Capital Investment Decisions: Further Issues

Financing a Business 1: Sources of Funds

Financing a Business 2: Raising Long-Term Funds

The Cost of Capital and the Capital Structure Decision

Developing a Dividend Policy

Managing Working Capital

Measuring and Managing for Shareholder Value

Mergers, Acquisitions, and the Valuation of Shares

Filters