Question 1

A financial manager's investment decisions determine ________.

Accepted Answer

A)  both the mix and the type of assets found on the firm's balance sheet 
B)  both the mix and the type of liabilities found on the firm's balance sheet 
C)  both the mix and the type of assets and liabilities found on the firm's balance sheet 
D)  both the mix and the type of short-term and long-term financing 
A)  both the mix and the type of assets found on the firm's balance sheet 
B)  both the mix and the type of liabilities found on the firm's balance sheet 
C)  both the mix and the type of assets and liabilities found on the firm's balance sheet 
D)  both the mix and the type of short-term and long-term financing

Question 2

If the CEO of a company were to pass away, what do you think would happen to price of the stock?

Accepted Answer

A)  It would decrease because of the perceived increased risk due of lack of near-term leadership. 
B)  It would increase because of the perceived increased risk due of lack of near-term leadership. 
C)  It would decrease because of the perceived decreased risk due of lack of near-term leadership. 
D)  It would increase because of the perceived decreased risk due of lack of near-term leadership. 
A)  It would decrease because of the perceived increased risk due of lack of near-term leadership. 
B)  It would increase because of the perceived increased risk due of lack of near-term leadership. 
C)  It would decrease because of the perceived decreased risk due of lack of near-term leadership. 
D)  It would increase because of the perceived decreased risk due of lack of near-term leadership.

Question 3

Corporate owners receive return ________.

Accepted Answer

A)  by realizing gains through increases in share price and interest earnings 
B)  by realizing gains through increases in share price and cash dividends 
C)  through capital appreciation and retained earnings 
D)  through interest earnings and earnings per share 
A)  by realizing gains through increases in share price and interest earnings 
B)  by realizing gains through increases in share price and cash dividends 
C)  through capital appreciation and retained earnings 
D)  through interest earnings and earnings per share

Question 4

A corporate treasurer typically handles both the cost accounting and financial accounting.

Accepted Answer

A) True 
 B)False

Question 5

The Sarbanes-Oxley Act of 2002 resulted in ________.

Accepted Answer

A)  tightened audit regulations and controls 
B)  toughened penalties against overcompensated executives 
C)  lenient penalties against executives who commit corporate fraud 
D)  delayed disclosure of stock sales by corporate executives 
A)  tightened audit regulations and controls 
B)  toughened penalties against overcompensated executives 
C)  lenient penalties against executives who commit corporate fraud 
D)  delayed disclosure of stock sales by corporate executives

Question 6

Which of the following is true of a cash flow?

Accepted Answer

A)  Profits do not necessarily result in cash flows available to the stockholders. 
B)  It is guaranteed that the board of directors will increase dividends when net cash flows increase. 
C)  A firm's income statement will never show a positive profit when its cash outflows exceed its cash inflows. 
D)  An increase in revenue will always result in an increase in cash flow. 
A)  Profits do not necessarily result in cash flows available to the stockholders. 
B)  It is guaranteed that the board of directors will increase dividends when net cash flows increase. 
C)  A firm's income statement will never show a positive profit when its cash outflows exceed its cash inflows. 
D)  An increase in revenue will always result in an increase in cash flow.

Question 7

A treasurer is responsible for the firm's accounting activities, such as corporate accounting, tax management, financial accounting, and cost accounting.

Accepted Answer

A) True 
 B)False

Question 8

A ________ is responsible for evaluating and recommending proposed long-term investments.

Accepted Answer

A)  financial analyst 
B)  credit manager 
C)  pension fund manager 
D)  capital expenditures manager 
A)  financial analyst 
B)  credit manager 
C)  pension fund manager 
D)  capital expenditures manager

Question 9

A financial manager is interested in the cash inflows and outflows of a firm, rather than the accounting data, in order to ________.

Accepted Answer

A)  ensure profitability 
B)  maintain healthy public relations 
C)  ensure timely payment of taxes 
D)  maintain an optimum solvency level 
A)  ensure profitability 
B)  maintain healthy public relations 
C)  ensure timely payment of taxes 
D)  maintain an optimum solvency level

Question 10

Marginal cost-benefit analysis states that financial decisions should be made and actions should be taken only when the added benefits exceed the added costs.

Accepted Answer

A) True 
 B)False

Question 11

The major purpose of the Sarbanes-Oxley Act of 2002 was to place caps on the compensation that could be paid to corporate executives.

Accepted Answer

A) True 
 B)False

Question 12

Agency problem arises when managers deviate from the goal of maximization of shareholder wealth by placing their personal goals ahead of the goals of shareholders.

Accepted Answer

A) True 
 B)False

Question 13

A financial manager must choose between three alternative investments. Each asset is expected to provide earnings over a three-year period as described below. Based on the wealth maximization goal, the financial manager would ________.

Accepted Answer

A)  choose Asset 1 
B)  choose Asset 2 
C)  choose Asset 3 
D)  be indifferent between Asset 1 and Asset 2 
A)  choose Asset 1 
B)  choose Asset 2 
C)  choose Asset 3 
D)  be indifferent between Asset 1 and Asset 2

Question 14

The financial manager of a firm prepares financial statements that recognize revenue at the point of sale and expenses when incurred.

Accepted Answer

A) True 
 B)False

Question 15

In partnerships, partners can readily transfer their wealth to other partners.

Accepted Answer

A) True 
 B)False

Question 16

Profit maximization as a goal is ideal because it directly considers ________.

Accepted Answer

A)  risk and book value of assets 
B)  timing and cash flow 
C)  timing and risk 
D)  EPS and stock price. 
A)  risk and book value of assets 
B)  timing and cash flow 
C)  timing and risk 
D)  EPS and stock price.

Question 17

A firm has just ended its calendar year making a sale in the amount of $150,000 of merchandise purchased during the year at a total cost of $112,500. Although the firm paid in full for the merchandise during the year, it is 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)  $0 and $150,000, respectively 
B)  $37,500 and -$150,000, respectively 
C)  $37,500 and -$112,500, respectively 
D)  $150,000 and $112,500, respectively 
A)  $0 and $150,000, respectively 
B)  $37,500 and -$150,000, respectively 
C)  $37,500 and -$112,500, respectively 
D)  $150,000 and $112,500, respectively

Question 18

Which of the following is a measure of profit maximization to shareholders?

Accepted Answer

A)  the timing of returns 
B)  earnings per share 
C)  current assets 
D)  market risk premium 
A)  the timing of returns 
B)  earnings per share 
C)  current assets 
D)  market risk premium

Question 19

Which of the following is true of sole proprietorships and corporations?

Accepted Answer

A)  It is difficult to transfer ownership of corporations compared to that of sole proprietorships. 
B)  Income from both forms of organizations are taxed only at the corporate level. 
C)  Both sole proprietorships and corporations are equally scrutinized and regulated by government bodies. 
D)  In sole proprietorships, owners have unlimited liability; whereas, in corporations, owners have limited liability. 
A)  It is difficult to transfer ownership of corporations compared to that of sole proprietorships. 
B)  Income from both forms of organizations are taxed only at the corporate level. 
C)  Both sole proprietorships and corporations are equally scrutinized and regulated by government bodies. 
D)  In sole proprietorships, owners have unlimited liability; whereas, in corporations, owners have limited liability.

Question 20

Which of the following is the purest and most basic form of corporate ownership?

Accepted Answer

A)  bond 
B)  notes 
C)  common stock 
D)  preferred stock 
A)  bond 
B)  notes 
C)  common stock 
D)  preferred stock

A financial manager's investment decisions determine ________.

If the CEO of a company were to pass away, what do you think would happen to price of the stock?

Corporate owners receive return ________.

A corporate treasurer typically handles both the cost accounting and financial accounting.

The Sarbanes-Oxley Act of 2002 resulted in ________.

Which of the following is true of a cash flow?

A treasurer is responsible for the firm's accounting activities, such as corporate accounting, tax management, financial accounting, and cost accounting.

A ________ is responsible for evaluating and recommending proposed long-term investments.

A financial manager is interested in the cash inflows and outflows of a firm, rather than the accounting data, in order to ________.

Marginal cost-benefit analysis states that financial decisions should be made and actions should be taken only when the added benefits exceed the added costs.

The major purpose of the Sarbanes-Oxley Act of 2002 was to place caps on the compensation that could be paid to corporate executives.

Agency problem arises when managers deviate from the goal of maximization of shareholder wealth by placing their personal goals ahead of the goals of shareholders.

A financial manager must choose between three alternative investments. Each asset is expected to provide earnings over a three-year period as described below. Based on the wealth maximization goal, the financial manager would ________.

The financial manager of a firm prepares financial statements that recognize revenue at the point of sale and expenses when incurred.

In partnerships, partners can readily transfer their wealth to other partners.

Profit maximization as a goal is ideal because it directly considers ________.

Which of the following is a measure of profit maximization to shareholders?

Which of the following is true of sole proprietorships and corporations?

Which of the following is the purest and most basic form of corporate ownership?

The Financial Market Environment

Financial Statements and Ratio Analysis

Cash Flow and Financial Planning

Time Value of Money

Interest Rates and Bond Valuation

Stock Valuation

Risk and Return

The Cost of Capital

Capital Budgeting Techniques

Capital Budgeting Cash Flows

Risk and Refinements in Capital Budgeting

Leverage and Capital Structure

Payout Policy

Working Capital and Current Assets Management

Current Liabilities Management

Hybrid and Derivative Securities

Mergers, Lbos, Divestitures, and Business Failure

International Managerial Finance

Filters

Exam 1: The Role of Managerial Finance

A financial manager's investment decisions determine ________.

If the CEO of a company were to pass away, what do you think would happen to price of the stock?

Corporate owners receive return ________.

A corporate treasurer typically handles both the cost accounting and financial accounting.

The Sarbanes-Oxley Act of 2002 resulted in ________.

Which of the following is true of a cash flow?

A treasurer is responsible for the firm's accounting activities, such as corporate accounting, tax management, financial accounting, and cost accounting.

A ________ is responsible for evaluating and recommending proposed long-term investments.

A financial manager is interested in the cash inflows and outflows of a firm, rather than the accounting data, in order to ________.

Marginal cost-benefit analysis states that financial decisions should be made and actions should be taken only when the added benefits exceed the added costs.

The major purpose of the Sarbanes-Oxley Act of 2002 was to place caps on the compensation that could be paid to corporate executives.

Agency problem arises when managers deviate from the goal of maximization of shareholder wealth by placing their personal goals ahead of the goals of shareholders.

A financial manager must choose between three alternative investments. Each asset is expected to provide earnings over a three-year period as described below. Based on the wealth maximization goal, the financial manager would ________.

The financial manager of a firm prepares financial statements that recognize revenue at the point of sale and expenses when incurred.

In partnerships, partners can readily transfer their wealth to other partners.

Profit maximization as a goal is ideal because it directly considers ________.

Which of the following is a measure of profit maximization to shareholders?

Which of the following is true of sole proprietorships and corporations?

Which of the following is the purest and most basic form of corporate ownership?

The Financial Market Environment

Financial Statements and Ratio Analysis

Cash Flow and Financial Planning

Time Value of Money

Interest Rates and Bond Valuation

Stock Valuation

Risk and Return

The Cost of Capital

Capital Budgeting Techniques

Capital Budgeting Cash Flows

Risk and Refinements in Capital Budgeting

Leverage and Capital Structure

Payout Policy

Working Capital and Current Assets Management

Current Liabilities Management

Hybrid and Derivative Securities

Mergers, Lbos, Divestitures, and Business Failure

International Managerial Finance

Filters