Question 1

Which of the following statements is incorrect?

Accepted Answer

A)  Partnerships have unlimited liability. 
B)  Most sole proprietors raise money by borrowing from banks. 
C)  An advantage of sole proprietorships is that the owner has complete control. 
D)  S corporations are considered a hybrid organization. 
A)  Partnerships have unlimited liability. 
B)  Most sole proprietors raise money by borrowing from banks. 
C)  An advantage of sole proprietorships is that the owner has complete control. 
D)  S corporations are considered a hybrid organization.

Question 2

Outside parties that monitor the firm include all of the following EXCEPT

Accepted Answer

A)  credit agencies. 
B)  the New York Stock Exchange. 
C)  analysts. 
D)  bankers. 
A)  credit agencies. 
B)  the New York Stock Exchange. 
C)  analysts. 
D)  bankers.

Question 3

Which statement is incorrect regarding hybrid organizations?

Accepted Answer

A)  They offer single taxation. 
B)  They offer limited risk to the owners. 
C)  They offer the same type of control as a sole proprietorship. 
D)  All of these choices are correct. 
A)  They offer single taxation. 
B)  They offer limited risk to the owners. 
C)  They offer the same type of control as a sole proprietorship. 
D)  All of these choices are correct.

Question 4

An angel investor differs from a venture capitalist because of the

Accepted Answer

A)  type of investment. 
B)  investment time frame. 
C)  size of investment. 
D)  voting rights. 
A)  type of investment. 
B)  investment time frame. 
C)  size of investment. 
D)  voting rights.

Question 5

Which of the following will help you make better personal financial decisions?

Accepted Answer

A)  knowing finance theory 
B)  applying financial tools 
C)  auditors 
D)  knowing finance theory and applying financial tools. 
A)  knowing finance theory 
B)  applying financial tools 
C)  auditors 
D)  knowing finance theory and applying financial tools.

Question 6

Which of the following is not an impact of the slowdown occurring in China's economy?

Accepted Answer

A)  lower demand in materials such as steel, iron ore, and copper 
B)  real estate market declining in Sydney, Australia 
C)  money going out of Manhattan, New York 
D)  falling community prices 
A)  lower demand in materials such as steel, iron ore, and copper 
B)  real estate market declining in Sydney, Australia 
C)  money going out of Manhattan, New York 
D)  falling community prices

Question 7

Which of the following is the firm's highest-level financial manager?

Accepted Answer

A)  chief executive officer 
B)  chief financial officer 
C)  board of directors 
D)  corporate governance 
A)  chief executive officer 
B)  chief financial officer 
C)  board of directors 
D)  corporate governance

Question 8

The practice generally known as double taxation is due to

Accepted Answer

A)  shareholders' dividends being taxed at both the federal and state levels. 
B)  corporate income being taxed at both the federal and state levels. 
C)  interest on shareholders' dividends being taxed as income. 
D)  corporate incomes being taxed at the corporate level, then again at the shareholder level when corporate profits are paid out as dividends. 
A)  shareholders' dividends being taxed at both the federal and state levels. 
B)  corporate income being taxed at both the federal and state levels. 
C)  interest on shareholders' dividends being taxed as income. 
D)  corporate incomes being taxed at the corporate level, then again at the shareholder level when corporate profits are paid out as dividends.

Question 9

The board of directors

Accepted Answer

A)  are hired by the CEO. 
B)  are elected by shareholders. 
C)  have unlimited liability since they oversee the day-to-day operations of the firm. 
D)  are employed by the Securities Exchange Commission to ensure its rules and regulations have been met. 
A)  are hired by the CEO. 
B)  are elected by shareholders. 
C)  have unlimited liability since they oversee the day-to-day operations of the firm. 
D)  are employed by the Securities Exchange Commission to ensure its rules and regulations have been met.

Question 10

Which of these are NOT basic approaches to minimizing the agency problem?

Accepted Answer

A)  ignore the conflict of interest 
B)  monitor managers' actions 
C)  align managers' personal interest with those of the owners by making the managers owners 
D)  all of these choices are correct. 
A)  ignore the conflict of interest 
B)  monitor managers' actions 
C)  align managers' personal interest with those of the owners by making the managers owners 
D)  all of these choices are correct.

Question 11

The overall goal of the financial manager is to

Accepted Answer

A)  minimize total costs. 
B)  maximize net income. 
C)  maximize earnings per share. 
D)  maximize shareholder wealth. 
A)  minimize total costs. 
B)  maximize net income. 
C)  maximize earnings per share. 
D)  maximize shareholder wealth.

Question 12

Financial management involves decisions about which of the following?

Accepted Answer

A)  which projects to fund 
B)  how to minimize taxation 
C)  what type of capital should be raised 
D)  all of these choices are correct. 
A)  which projects to fund 
B)  how to minimize taxation 
C)  what type of capital should be raised 
D)  all of these choices are correct.

Question 13

Which of the following statements is incorrect?

Accepted Answer

A)  Sole proprietorships are subject to less regulation. 
B)  Both angel investors and venture capitalists exchange capital for ownership. 
C)  Shareholders are responsible for paying off the corporate bonds in the event of a bankruptcy. 
D)  All of these choices are correct. 
A)  Sole proprietorships are subject to less regulation. 
B)  Both angel investors and venture capitalists exchange capital for ownership. 
C)  Shareholders are responsible for paying off the corporate bonds in the event of a bankruptcy. 
D)  All of these choices are correct.

Question 14

Which of the following personal decision IS impacted by finance?

Accepted Answer

A)  borrowing money to purchase cars or homes 
B)  making credit card payments 
C)  making retirement decisions 
D)  all of these choices are correct. 
A)  borrowing money to purchase cars or homes 
B)  making credit card payments 
C)  making retirement decisions 
D)  all of these choices are correct.

Question 15

Methods to minimize agency problem include all EXCEPT

Accepted Answer

A)  offer the managers an equity stake in the firm. 
B)  award the CEO stock options. 
C)  allow the CEO to purchase stock via an employee stock option plan. 
D)  allow the CEO to purchase bonds via an employee bond option plan. 
A)  offer the managers an equity stake in the firm. 
B)  award the CEO stock options. 
C)  allow the CEO to purchase stock via an employee stock option plan. 
D)  allow the CEO to purchase bonds via an employee bond option plan.

Question 16

All of the following are an example of a fiduciary relationship EXCEPT

Accepted Answer

A)  a bank employee manages deposits. 
B)  a financial advisor advises her clients. 
C)  a CEO manages the firm. 
D)  the shareholder elects a board member. 
A)  a bank employee manages deposits. 
B)  a financial advisor advises her clients. 
C)  a CEO manages the firm. 
D)  the shareholder elects a board member.

Question 17

The increase in oil production in the United States characterizes which of the following key financial concepts presented in this book?

Accepted Answer

A)  the Rule of 72 
B)  time value of money 
C)  risk and return 
D)  capital budgeting 
A)  the Rule of 72 
B)  time value of money 
C)  risk and return 
D)  capital budgeting

Question 18

Which of these does NOT act as a monitor of how the firm is being run outside the firm?

Accepted Answer

A)  auditors 
B)  analysts 
C)  credit rating agencies 
D)  members of the board of directors 
A)  auditors 
B)  analysts 
C)  credit rating agencies 
D)  members of the board of directors

Question 19

This is the set of laws,policies,incentives,and monitors designed to handle the issues arising from the separation of ownership and control.

Accepted Answer

A)  agency theory 
B)  corporate governance 
C)  defined benefit plan 
D)  invisible hand 
A)  agency theory 
B)  corporate governance 
C)  defined benefit plan 
D)  invisible hand

Question 20

For corporations,maximizing the value of owner's equity can also be stated as

Accepted Answer

A)  maximizing retained earnings. 
B)  maximizing earnings per share. 
C)  maximizing net income. 
D)  maximizing the stock price. 
A)  maximizing retained earnings. 
B)  maximizing earnings per share. 
C)  maximizing net income. 
D)  maximizing the stock price.

Which of the following statements is incorrect?

Outside parties that monitor the firm include all of the following EXCEPT

Which statement is incorrect regarding hybrid organizations?

An angel investor differs from a venture capitalist because of the

Which of the following will help you make better personal financial decisions?

Which of the following is not an impact of the slowdown occurring in China's economy?

Which of the following is the firm's highest-level financial manager?

The practice generally known as double taxation is due to

The board of directors

Which of these are NOT basic approaches to minimizing the agency problem?

The overall goal of the financial manager is to

Financial management involves decisions about which of the following?

Which of the following statements is incorrect?

Which of the following personal decision IS impacted by finance?

Methods to minimize agency problem include all EXCEPT

All of the following are an example of a fiduciary relationship EXCEPT

The increase in oil production in the United States characterizes which of the following key financial concepts presented in this book?

Which of these does NOT act as a monitor of how the firm is being run outside the firm?

This is the set of laws,policies,incentives,and monitors designed to handle the issues arising from the separation of ownership and control.

For corporations,maximizing the value of owner's equity can also be stated as

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money 1: Analyzing Single Cash Flows

Time Value of Money 2: Analyzing Annuity Cash Flows

Understanding Financial Markets and Institutions

Valuing Bonds

Valuing Stocks

Characterizing Risk and Return

Estimating Risk and Return

Calculating the Cost of Capital

Estimating Cash Flows on Capital Budgeting Projects

Weighing Net Present Value and Other Capital Budgeting Criteria

Working Capital Management and Policies

Filters

Exam 1: Introduction to Financial Management

Which of the following statements is incorrect?

Outside parties that monitor the firm include all of the following EXCEPT

Which statement is incorrect regarding hybrid organizations?

An angel investor differs from a venture capitalist because of the

Which of the following will help you make better personal financial decisions?

Which of the following is not an impact of the slowdown occurring in China's economy?

Which of the following is the firm's highest-level financial manager?

The practice generally known as double taxation is due to

The board of directors

Which of these are NOT basic approaches to minimizing the agency problem?

The overall goal of the financial manager is to

Financial management involves decisions about which of the following?

Which of the following statements is incorrect?

Which of the following personal decision IS impacted by finance?

Methods to minimize agency problem include all EXCEPT

All of the following are an example of a fiduciary relationship EXCEPT

The increase in oil production in the United States characterizes which of the following key financial concepts presented in this book?

Which of these does NOT act as a monitor of how the firm is being run outside the firm?

This is the set of laws,policies,incentives,and monitors designed to handle the issues arising from the separation of ownership and control.

For corporations,maximizing the value of owner's equity can also be stated as

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money 1: Analyzing Single Cash Flows

Time Value of Money 2: Analyzing Annuity Cash Flows

Understanding Financial Markets and Institutions

Valuing Bonds

Valuing Stocks

Characterizing Risk and Return

Estimating Risk and Return

Calculating the Cost of Capital

Estimating Cash Flows on Capital Budgeting Projects

Weighing Net Present Value and Other Capital Budgeting Criteria

Working Capital Management and Policies

Filters