Question 1

Which form of organization is free of initial legal requirements?

Accepted Answer

A)  sole proprietorship 
B)  general partnership 
C)  corporation 
D)  both A and B 
A)  sole proprietorship 
B)  general partnership 
C)  corporation 
D)  both A and B

Question 2

Has looking beyond U.S.borders been a profitable experience for U.S.corporations?

Accepted Answer

Many U.S.companies,including General Ele

Question 3

The corporation is a legal entity separate from its owners; thus it is possible for the corporation to continue even upon the death of one or more shareholders.

Accepted Answer

A) True 
 B)False

Question 4

A corporate financial manager trying to maximize shareholder value

Accepted Answer

A)  is not concerned with ethics but rather with writing iron-clad contracts. 
B)  can safely ignore ethics as long as no laws are broken. 
C)  must behave ethically in order to stay out of jail. 
D)  is concerned with ethics because unethical behavior destroys trust, and businesses cannot function without a certain degree of trust. 
A)  is not concerned with ethics but rather with writing iron-clad contracts. 
B)  can safely ignore ethics as long as no laws are broken. 
C)  must behave ethically in order to stay out of jail. 
D)  is concerned with ethics because unethical behavior destroys trust, and businesses cannot function without a certain degree of trust.

Question 5

Maximization of shareholder wealth

Accepted Answer

A)  represents a zero sum game in which one corporation gains at the expense of others. 
B)  provides benefits to society as scarce resources are directed to their most productive use. 
C)  is not a practical goal since it cannot be measured effectively. 
D)  is achieved only if cash flows exceed accounting profits. 
A)  represents a zero sum game in which one corporation gains at the expense of others. 
B)  provides benefits to society as scarce resources are directed to their most productive use. 
C)  is not a practical goal since it cannot be measured effectively. 
D)  is achieved only if cash flows exceed accounting profits.

Question 6

What are the duties of a treasurer? Of a controller?

Accepted Answer

The treasurer generally handles the firm

Question 7

The three basic types of issues addressed by the study of finance are

Accepted Answer

A)  capital budgeting, capital structure decisions, and working capital management. 
B)  capital budgeting, working capital management, and investment analysis. 
C)  capital structure decisions, working capital management, and sustained profitability. 
D)  capital budgeting, investment analysis, and cash management. 
A)  capital budgeting, capital structure decisions, and working capital management. 
B)  capital budgeting, working capital management, and investment analysis. 
C)  capital structure decisions, working capital management, and sustained profitability. 
D)  capital budgeting, investment analysis, and cash management.

Question 8

Which of the following is NOT true for a limited partnership?

Accepted Answer

A)  It has limited liability for its owners. 
B)  One general partner must exist who has unlimited liability. 
C)  Only the name of general partners can appear in the name of the firm. 
D)  Limited partners may sell their interest in the company. 
A)  It has limited liability for its owners. 
B)  One general partner must exist who has unlimited liability. 
C)  Only the name of general partners can appear in the name of the firm. 
D)  Limited partners may sell their interest in the company.

Question 9

What has brought on the era of the multinational corporation?

Accepted Answer

In the search for profits,U.S.corporatio

Question 10

A homeowner that owes more on his/her mortgage than the home is worth is said to be "under water."

Accepted Answer

A) True 
 B)False

Question 11

A limited liability company (LLC)is taxed like a partnership but provides limited liability for its owners,similar to a corporation.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following forms of business organizations provide limited liability to all its owners?

Accepted Answer

A)  general partnership 
B)  limited partnership 
C)  corporation 
D)  both B and C 
A)  general partnership 
B)  limited partnership 
C)  corporation 
D)  both B and C

Question 13

Capital budgeting is concerned with

Accepted Answer

A)  whether a company's assets should be financed with debt or equity. 
B)  managing a firm's cash budgeting procedures. 
C)  what long-term investments a firm should undertake. 
D)  planning sales of a corporation's equity capital. 
A)  whether a company's assets should be financed with debt or equity. 
B)  managing a firm's cash budgeting procedures. 
C)  what long-term investments a firm should undertake. 
D)  planning sales of a corporation's equity capital.

Question 14

The CEO of High Tech International decides to change an accounting method at the end of the current year.The change results in reported profits increasing by 5%,but the company's cash flows are not changed.If capital markets are efficient,then

Accepted Answer

A)  the stock price will not be affected by the accounting change. 
B)  the stock price will increase due to higher profits. 
C)  the stock price will increase only if the accounting change will also result in higher profits in the next year. 
D)  the stock price will decrease because accounting method changes are not permitted under generally accepted accounting principles. 
A)  the stock price will not be affected by the accounting change. 
B)  the stock price will increase due to higher profits. 
C)  the stock price will increase only if the accounting change will also result in higher profits in the next year. 
D)  the stock price will decrease because accounting method changes are not permitted under generally accepted accounting principles.

Question 15

All of the following business organizations provide limited liability to their owners EXCEPT

Accepted Answer

A)  general partnership. 
B)  S-type corporation. 
C)  corporation. 
D)  limited liability company. 
A)  general partnership. 
B)  S-type corporation. 
C)  corporation. 
D)  limited liability company.

Question 16

To measure value,the concept of time value of money is used

Accepted Answer

A)  to determine the interest rate paid on corporate debt. 
B)  to bring the future benefits and costs of a project, measured by its expected profits, back to the present. 
C)  to bring the future benefits and costs of a project, measured by its cash flows, back to the present. 
D)  to ensure that expected future profits exceed current profits today. 
A)  to determine the interest rate paid on corporate debt. 
B)  to bring the future benefits and costs of a project, measured by its expected profits, back to the present. 
C)  to bring the future benefits and costs of a project, measured by its cash flows, back to the present. 
D)  to ensure that expected future profits exceed current profits today.

Question 17

A financial manager is considering two projects,A and B.A is expected to add $2 million to profits this year while B is expected to add $1 million to profits this year.Which of the following statements is MOST correct?

Accepted Answer

A)  The manager should select project A because it maximizes profits. 
B)  The manager should select the project that maximizes long-term profits, not just one year of profits. 
C)  The manager should select project A or he is irrational. 
D)  The manager should select the project that causes the stock price to increase the most, which could be A or B. 
A)  The manager should select project A because it maximizes profits. 
B)  The manager should select the project that maximizes long-term profits, not just one year of profits. 
C)  The manager should select project A or he is irrational. 
D)  The manager should select the project that causes the stock price to increase the most, which could be A or B.

Question 18

Which of the following forms of business organization limits the liability of owners?

Accepted Answer

A)  sole proprietorship 
B)  general partnership 
C)  corporation 
D)  two person partnership 
A)  sole proprietorship 
B)  general partnership 
C)  corporation 
D)  two person partnership

Question 19

Shareholders react to poor investment or dividend decisions by causing the total value of the firm's stock to fall,and they react to good decisions by bidding the price of the stock up.

Accepted Answer

A) True 
 B)False

Question 20

Only a firm's financial decisions affect its stock prices.

Accepted Answer

A) True 
 B)False

Which form of organization is free of initial legal requirements?

Has looking beyond U.S.borders been a profitable experience for U.S.corporations?

The corporation is a legal entity separate from its owners; thus it is possible for the corporation to continue even upon the death of one or more shareholders.

A corporate financial manager trying to maximize shareholder value

Maximization of shareholder wealth

What are the duties of a treasurer? Of a controller?

The three basic types of issues addressed by the study of finance are

Which of the following is NOT true for a limited partnership?

What has brought on the era of the multinational corporation?

A homeowner that owes more on his/her mortgage than the home is worth is said to be "under water."

A limited liability company (LLC)is taxed like a partnership but provides limited liability for its owners,similar to a corporation.

Which of the following forms of business organizations provide limited liability to all its owners?

Capital budgeting is concerned with

The CEO of High Tech International decides to change an accounting method at the end of the current year.The change results in reported profits increasing by 5%,but the company's cash flows are not changed.If capital markets are efficient,then

All of the following business organizations provide limited liability to their owners EXCEPT

To measure value,the concept of time value of money is used

A financial manager is considering two projects,A and B.A is expected to add $2 million to profits this year while B is expected to add $1 million to profits this year.Which of the following statements is MOST correct?

Which of the following forms of business organization limits the liability of owners?

Shareholders react to poor investment or dividend decisions by causing the total value of the firm's stock to fall,and they react to good decisions by bidding the price of the stock up.

Only a firm's financial decisions affect its stock prices.

The Financial Markets and Interest Rates

Understanding Financial Statements and Cash Flows

Evaluating a Firms Financial Performance

The Time Value of Money

The Meaning and Measurement of Risk and Return

The Valuation and Characteristics of Bonds

The Valuation and Characteristics of Stock

The Cost of Capital

Capital-Budgeting Techniques and Practice

Cash Flows and Other Topics in Capital Budgeting

Determining the Financing Mix

Dividend Policy and Internal Financing

Short-Term Financial Planning

Working-Capital Management

International Business Finance

Cash,receivables,and Inventory Management

Filters

Exam 1: An Introduction to the Foundations of Financial Management

Which form of organization is free of initial legal requirements?

Has looking beyond U.S.borders been a profitable experience for U.S.corporations?

The corporation is a legal entity separate from its owners; thus it is possible for the corporation to continue even upon the death of one or more shareholders.

A corporate financial manager trying to maximize shareholder value

Maximization of shareholder wealth

What are the duties of a treasurer? Of a controller?

The three basic types of issues addressed by the study of finance are

Which of the following is NOT true for a limited partnership?

What has brought on the era of the multinational corporation?

A homeowner that owes more on his/her mortgage than the home is worth is said to be "under water."

A limited liability company (LLC)is taxed like a partnership but provides limited liability for its owners,similar to a corporation.

Which of the following forms of business organizations provide limited liability to all its owners?

Capital budgeting is concerned with

The CEO of High Tech International decides to change an accounting method at the end of the current year.The change results in reported profits increasing by 5%,but the company's cash flows are not changed.If capital markets are efficient,then

All of the following business organizations provide limited liability to their owners EXCEPT

To measure value,the concept of time value of money is used

A financial manager is considering two projects,A and B.A is expected to add $2 million to profits this year while B is expected to add $1 million to profits this year.Which of the following statements is MOST correct?

Which of the following forms of business organization limits the liability of owners?

Shareholders react to poor investment or dividend decisions by causing the total value of the firm's stock to fall,and they react to good decisions by bidding the price of the stock up.

Only a firm's financial decisions affect its stock prices.

The Financial Markets and Interest Rates

Understanding Financial Statements and Cash Flows

Evaluating a Firms Financial Performance

The Time Value of Money

The Meaning and Measurement of Risk and Return

The Valuation and Characteristics of Bonds

The Valuation and Characteristics of Stock

The Cost of Capital

Capital-Budgeting Techniques and Practice

Cash Flows and Other Topics in Capital Budgeting

Determining the Financing Mix

Dividend Policy and Internal Financing

Short-Term Financial Planning

Working-Capital Management

International Business Finance

Cash,receivables,and Inventory Management

Filters