Question 1

Profit maximization as a corporate objective does not take into account

Accepted Answer

A)  debt 
B)  risk 
C)  shares 
D)  cash 
E)  EPS 
A)  debt 
B)  risk 
C)  shares 
D)  cash 
E)  EPS

Question 2

The over-the-counter market is

Accepted Answer

A)  An Internet based securities exchange for public trading 
B)  A central location where dealers trade 
C)  A network of dealers linked by computers and telephones 
D)  Local public security exchanges similar to bank branches 
E)  A central physical location where the general public trades 
A)  An Internet based securities exchange for public trading 
B)  A central location where dealers trade 
C)  A network of dealers linked by computers and telephones 
D)  Local public security exchanges similar to bank branches 
E)  A central physical location where the general public trades

Question 3

A disadvantage to further strengthening the framework of rules against fraud is that

Accepted Answer

A)  Unscrupulous directors may continue to find ways to commit fraud 
B)  The entrepreneurial spirit of talented directors could be stifled 
C)  Shareholders will become overprotective and passive 
D)  Enforcement officials are more likely to become corrupt 
E)  Information to shareholders will become greatly restricted 
A)  Unscrupulous directors may continue to find ways to commit fraud 
B)  The entrepreneurial spirit of talented directors could be stifled 
C)  Shareholders will become overprotective and passive 
D)  Enforcement officials are more likely to become corrupt 
E)  Information to shareholders will become greatly restricted

Question 4

Directors dealing in shares of a business on the basis of information that is not available to shareholders is called

Accepted Answer

A)  Limited disclosure 
B)  Restrictive practice 
C)  Insider-trading 
D)  Restricted exchange 
E)  Illegal transfer 
A)  Limited disclosure 
B)  Restrictive practice 
C)  Insider-trading 
D)  Restricted exchange 
E)  Illegal transfer

Question 5

When finance department staff provide information to ensure that business plans are achieving expected profit levels and cash flow, they are performing the function of

Accepted Answer

A)  Risk Management 
B)  Financial Control 
C)  Investment Project Appraisal 
D)  Capital Market Assessment 
E)  Asset Management 
A)  Risk Management 
B)  Financial Control 
C)  Investment Project Appraisal 
D)  Capital Market Assessment 
E)  Asset Management

Question 6

________ is the term used to describe a situation where the interests of the shareholders conflict with the senior managers who have been hired to run the company.

Accepted Answer

A)  Agency Problem 
B)  Principal Problem 
C)  Delegation Problem 
D)  Arms length Attenuation 
E)  The Governance Gap 
A)  Agency Problem 
B)  Principal Problem 
C)  Delegation Problem 
D)  Arms length Attenuation 
E)  The Governance Gap

Question 7

Wealth maximization is consistent with ethical behavior because

Accepted Answer

A)  Managers tend to focus on long-term results not immediate performance 
B)  All unethical behavior by managers is known and ethical shareholders will not hold shares in their companies 
C)  Any unethical behavior always results in legal proceedings against the company 
D)  Low wages and poor working conditions do not produce quality, innovative products 
E)  In the short term, ethical behavior is always more cost-effective than unethical behavior 
A)  Managers tend to focus on long-term results not immediate performance 
B)  All unethical behavior by managers is known and ethical shareholders will not hold shares in their companies 
C)  Any unethical behavior always results in legal proceedings against the company 
D)  Low wages and poor working conditions do not produce quality, innovative products 
E)  In the short term, ethical behavior is always more cost-effective than unethical behavior

Question 8

Shareholders are most likely to discover a conflict with senior managers when

Accepted Answer

A)  The information available to shareholders about management decisions is limited 
B)  There are few opportunities for shareholders to invest their money 
C)  Shares are spread over a very large number of shareholders 
D)  Shareholders closely track the use of resources by the Company 
E)  The availability of management talent is limited 
A)  The information available to shareholders about management decisions is limited 
B)  There are few opportunities for shareholders to invest their money 
C)  Shares are spread over a very large number of shareholders 
D)  Shareholders closely track the use of resources by the Company 
E)  The availability of management talent is limited

Question 9

The four main tasks of the financial function are to manage and plan

Accepted Answer

A)  Finances, capital market operations, financial control, and investment appraisal 
B)  Accounting, marketing, human resources, operations management departments 
C)  Annual budgeting, cash flow management, purchasing timing, and payments timing 
D)  The balance sheet, income statement, and statements of retained earnings and cash flow 
E)  The accounting records for receivables, payables, outstanding loans and notes. 
A)  Finances, capital market operations, financial control, and investment appraisal 
B)  Accounting, marketing, human resources, operations management departments 
C)  Annual budgeting, cash flow management, purchasing timing, and payments timing 
D)  The balance sheet, income statement, and statements of retained earnings and cash flow 
E)  The accounting records for receivables, payables, outstanding loans and notes.

Question 10

Today, Financial Management can be appropriately described as

Accepted Answer

A)  The economics of time and risk 
B)  A direct offshoot of accounting 
C)  The quantitative side of strategic management 
D)  A practice based on informal procedures 
E)  The implementation of capital market theories 
A)  The economics of time and risk 
B)  A direct offshoot of accounting 
C)  The quantitative side of strategic management 
D)  A practice based on informal procedures 
E)  The implementation of capital market theories

Question 11

Last year, Benton Manufacturing, Inc. had capital invested of $2,500,000 on 50,000 shares outstanding and net income of $450,000. Benton recently issued another 10,000 shares at $50 each. What net income must the company achieve to maintain the previous year's earnings per share?

Accepted Answer

A)  $300,000 
B)  $400,000 
C)  $450,000 
D)  $500,000 
E)  $540,000 
A)  $300,000 
B)  $400,000 
C)  $450,000 
D)  $500,000 
E)  $540,000

Question 12

A key activity in Capital Market operations involves

Accepted Answer

A)  Assessing the profitability of a proposed investment 
B)  Balancing short-term and long-term financing 
C)  Determining how much funding can be generated internally 
D)  Providing cash flow information to operations managers 
E)  Determining market reaction to proposed investment plans 
A)  Assessing the profitability of a proposed investment 
B)  Balancing short-term and long-term financing 
C)  Determining how much funding can be generated internally 
D)  Providing cash flow information to operations managers 
E)  Determining market reaction to proposed investment plans

Question 13

Orbit Ltd. has 30,000 shares outstanded and earned $30,000 on capital invested of $90,000 last year. What is the new EPS after the investment succeeds?

Accepted Answer

A)  0.80 
B)  1.00 
C)  1.10 
D)  1.47 
E)  4.40 
A)  0.80 
B)  1.00 
C)  1.10 
D)  1.47 
E)  4.40

Question 14

When a business seeks to provide each stakeholder group with a satisfactory return, it is said to be achieving a business objective of

Accepted Answer

A)  Profit distribution 
B)  Good corporate citizenship 
C)  Satisficing 
D)  Stakeholder cooperation 
E)  Economic egalitarianism 
A)  Profit distribution 
B)  Good corporate citizenship 
C)  Satisficing 
D)  Stakeholder cooperation 
E)  Economic egalitarianism

Question 15

An example of putting the short term considerations ahead of the long term planning is

Accepted Answer

A)  locking in a higher interest rate on debt when rates are expected to rise 
B)  using more expensive but higher quality parts to manufacture a product 
C)  reducing the warranty period from 1 year to six months to save money 
D)  manufacturing large vehicles when gas prices are expected to rise 
E)  increasing sales commissions for the sale of energy inefficent products 
A)  locking in a higher interest rate on debt when rates are expected to rise 
B)  using more expensive but higher quality parts to manufacture a product 
C)  reducing the warranty period from 1 year to six months to save money 
D)  manufacturing large vehicles when gas prices are expected to rise 
E)  increasing sales commissions for the sale of energy inefficent products

Question 16

The most important advantage to a business in hiring outside directors is that

Accepted Answer

A)  In not being full-time employees, they are more independent than executive directors 
B)  In not being involved in day-to-day management, they can have a broad view of the Company 
C)  In being wholly paid in stock options, they are more likely to have the same interests as the shareholders 
D)  In being most often retired or semi-retired, they have more time to spend directing the business 
E)  In not being involved in day-to-day management, they are less likely to act in a fraudulent manner 
A)  In not being full-time employees, they are more independent than executive directors 
B)  In not being involved in day-to-day management, they can have a broad view of the Company 
C)  In being wholly paid in stock options, they are more likely to have the same interests as the shareholders 
D)  In being most often retired or semi-retired, they have more time to spend directing the business 
E)  In not being involved in day-to-day management, they are less likely to act in a fraudulent manner

Question 17

The objectives and long-term plans of a business are part of

Accepted Answer

A)  Tactical Planning 
B)  Goalsetting 
C)  Operations Management 
D)  Strategic Management 
E)  Mission Identification 
A)  Tactical Planning 
B)  Goalsetting 
C)  Operations Management 
D)  Strategic Management 
E)  Mission Identification

Question 18

The Principals of a corporation are its

Accepted Answer

A)  Managers 
B)  Shareholders 
C)  Lenders 
D)  Executives 
E)  Customers 
A)  Managers 
B)  Shareholders 
C)  Lenders 
D)  Executives 
E)  Customers

Question 19

For a company wishing to pursue a strategy of increasing shareholder wealth as opposed to profit maximization, which of the following would be the most appropriate action?

Accepted Answer

A)  Increase short-term return over sustained growth 
B)  Reduce spending on research and development 
C)  Distribute all after-tax net income as dividends 
D)  Offer only established products for sale 
E)  Close a retail location in a declining market 
A)  Increase short-term return over sustained growth 
B)  Reduce spending on research and development 
C)  Distribute all after-tax net income as dividends 
D)  Offer only established products for sale 
E)  Close a retail location in a declining market

Question 20

Satisfying the needs of shareholders, instead of other stakeholders, must be paramount to a business because

Accepted Answer

A)  This objective is always consistent with those of other stakeholders 
B)  Government will put pressure on a business to do so 
C)  Other stakeholders do not have an impact on the success of the business 
D)  Shareholders will always ensure that the needs of other stakeholders will be met 
E)  If the management team does not pursue this goal, they will be replaced 
A)  This objective is always consistent with those of other stakeholders 
B)  Government will put pressure on a business to do so 
C)  Other stakeholders do not have an impact on the success of the business 
D)  Shareholders will always ensure that the needs of other stakeholders will be met 
E)  If the management team does not pursue this goal, they will be replaced

Profit maximization as a corporate objective does not take into account

The over-the-counter market is

A disadvantage to further strengthening the framework of rules against fraud is that

Directors dealing in shares of a business on the basis of information that is not available to shareholders is called

When finance department staff provide information to ensure that business plans are achieving expected profit levels and cash flow, they are performing the function of

________ is the term used to describe a situation where the interests of the shareholders conflict with the senior managers who have been hired to run the company.

Wealth maximization is consistent with ethical behavior because

Shareholders are most likely to discover a conflict with senior managers when

The four main tasks of the financial function are to manage and plan

Today, Financial Management can be appropriately described as

Last year, Benton Manufacturing, Inc. had capital invested of $2,500,000 on 50,000 shares outstanding and net income of $450,000. Benton recently issued another 10,000 shares at $50 each. What net income must the company achieve to maintain the previous year's earnings per share?

A key activity in Capital Market operations involves

Orbit Ltd. has 30,000 shares outstanded and earned $30,000 on capital invested of $90,000 last year. What is the new EPS after the investment succeeds?

When a business seeks to provide each stakeholder group with a satisfactory return, it is said to be achieving a business objective of

An example of putting the short term considerations ahead of the long term planning is

The most important advantage to a business in hiring outside directors is that

The objectives and long-term plans of a business are part of

The Principals of a corporation are its

For a company wishing to pursue a strategy of increasing shareholder wealth as opposed to profit maximization, which of the following would be the most appropriate action?

Satisfying the needs of shareholders, instead of other stakeholders, must be paramount to a business because

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

Profit maximization as a corporate objective does not take into account

The over-the-counter market is

A disadvantage to further strengthening the framework of rules against fraud is that

Directors dealing in shares of a business on the basis of information that is not available to shareholders is called

When finance department staff provide information to ensure that business plans are achieving expected profit levels and cash flow, they are performing the function of

________ is the term used to describe a situation where the interests of the shareholders conflict with the senior managers who have been hired to run the company.

Wealth maximization is consistent with ethical behavior because

Shareholders are most likely to discover a conflict with senior managers when

The four main tasks of the financial function are to manage and plan

Today, Financial Management can be appropriately described as

Last year, Benton Manufacturing, Inc. had capital invested of $2,500,000 on 50,000 shares outstanding and net income of $450,000. Benton recently issued another 10,000 shares at $50 each. What net income must the company achieve to maintain the previous year's earnings per share?

A key activity in Capital Market operations involves

Orbit Ltd. has 30,000 shares outstanded and earned $30,000 on capital invested of $90,000 last year. What is the new EPS after the investment succeeds?

When a business seeks to provide each stakeholder group with a satisfactory return, it is said to be achieving a business objective of

An example of putting the short term considerations ahead of the long term planning is

The most important advantage to a business in hiring outside directors is that

The objectives and long-term plans of a business are part of

The Principals of a corporation are its

For a company wishing to pursue a strategy of increasing shareholder wealth as opposed to profit maximization, which of the following would be the most appropriate action?

Satisfying the needs of shareholders, instead of other stakeholders, must be paramount to a business because

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