Question 1

How will knowledge in the area of investments help you in your personal life?

Accepted Answer

A)  To determine how much risk you are willing to take with your investment portfolio. 
B)  To evaluate how well your investments are performing. 
C)  To help you to select investments that always outperform the market. 
D)  To help you to review companies when determining future growth prospects to include in your investment portfolio. 
E)  Answers a, b, and d are correct.

Question 2

Which of the following is consistent with maximizing the value of a firm?

Accepted Answer

A)  increasing the amount and complexity of financial data reported by the firm 
B)  increasing the riskiness of firm 
C)  spending large amounts of money perquisites for the managers 
D)  following sound sustainable business practices 
E)  None of the above

Question 3

At the beginning of the twentieth century, for the most part, the only investments available to individual investors were corporate stocks and bonds; but, today, there are a significantly greater number of investment choices because investors' demands have changed.

Accepted Answer

A) True 
 B)False

Question 4

In the early 1900s the emphasis of managerial finance was on the legal aspects of mergers, the formation of new firms, and the various types of securities firms could issue to raise funds.

Accepted Answer

A) True 
 B)False

Question 5

Coordination of the finance function and the marketing function is critical to the success of newly formed companies which must generate enough cash to survive

Accepted Answer

A) True 
 B)False

Question 6

The major areas included in the study of finance are information technology, investments and managerial finance.

Accepted Answer

A) True 
 B)False

Question 7

The financial manager interacts jointly with many different individuals and departments within the firm.Forecasting and planning, as well as coordination and control, are two of the major areas of responsibility where this interaction takes place.

Accepted Answer

A) True 
 B)False

Question 8

There are financial implications in virtually all business decisions, and non-financial executives must understand the financial implications of the decisions they make.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is NOT one of the several new areas that managerial finance expanded to focus on in the 1980s?

Accepted Answer

A)  The dramatic increase in both the use of computers for analysis and the electronic transfer of information. 
B)  The decreased importance of global markets and business operations 
C)  The deregulation of financial institutions and the resulting trend toward large, broadly diversified financial services companies. 
D)  Innovations in the financial products offered to investors 
E)  Inflation and its effects on business decisions

Question 10

The average American is knowledgeable about personal finance and tends to manage their retirement needs and debt levels responsibly.

Accepted Answer

A) True 
 B)False

Question 11

The well-developed financial markets that exist in the United States have allowed us to achieve a higher standard of living than would otherwise be possible.

Accepted Answer

A) True 
 B)False

Question 12

What major factor(s) led to the U.S.economic woes which started in 2007?

Accepted Answer

A)  U.S.overseas military engagements. 
B)  A decline in real estate values which resulted in increased mortgage defaults and foreclosures and a decline in financial markets. 
C)  The European economic crisis. 
D)  Inflation and manufacturing outsourcing. 
E)  None of the above.

Question 13

If you pursue a business career in a nonfinance profession you will not be exposed to finance concepts on the job.

Accepted Answer

A) True 
 B)False

Question 14

The finance function is fairly independent of most other corporate functions.Marketing decisions, for example, might affect the firm's need for funds but are not affected by conditions in financial markets or other financing issues.

Accepted Answer

A) True 
 B)False

Question 15

The electronic revolution has not really caught on in finance, primarily because finance decision making is a localized, private function that a firm does not wish to disclose to outsiders.

Accepted Answer

A) True 
 B)False

Question 16

The history of banking in the United States is one of continuous regulation to ensure the safety of our banking institution.For this reason, little deregulation has taken place.

Accepted Answer

A) True 
 B)False

Question 17

Much of the recent legislation enacted by the government has focused on the regulating of previously unregulated industries such as financial services and utilities.

Accepted Answer

A) True 
 B)False

Question 18

During the 1930s, investment experts suggested that stock value should be determined by computing the present value of the future cash flows associated with the stock.

Accepted Answer

A) True 
 B)False

Question 19

Managerial finance entails making decisions about

Accepted Answer

A)  Investment portfolios held by individual investors. 
B)  The regulation and deregulation of the banking industry. 
C)  How businesses acquire and use (invest) funds. 
D)  Which corporate stocks and bonds are mispriced in the financial markets. 
E)  All of the above.

Question 20

Which of the following is NOT one of the most important trends in managerial finance from the 1990s that continued into the twenty-first century?

Accepted Answer

A)  Regulatory attitude of government 
B)  Ongoing adaptation of electronic technology 
C)  Focus on corporate liquidity 
D)  Continued globalization of business 
E)  All of the above

Exam 1: An Overview of Finance

How will knowledge in the area of investments help you in your personal life?

Which of the following is consistent with maximizing the value of a firm?

At the beginning of the twentieth century, for the most part, the only investments available to individual investors were corporate stocks and bonds; but, today, there are a significantly greater number of investment choices because investors' demands have changed.

In the early 1900s the emphasis of managerial finance was on the legal aspects of mergers, the formation of new firms, and the various types of securities firms could issue to raise funds.

Coordination of the finance function and the marketing function is critical to the success of newly formed companies which must generate enough cash to survive

The major areas included in the study of finance are information technology, investments and managerial finance.

The financial manager interacts jointly with many different individuals and departments within the firm.Forecasting and planning, as well as coordination and control, are two of the major areas of responsibility where this interaction takes place.

There are financial implications in virtually all business decisions, and non-financial executives must understand the financial implications of the decisions they make.

Which of the following is NOT one of the several new areas that managerial finance expanded to focus on in the 1980s?

The average American is knowledgeable about personal finance and tends to manage their retirement needs and debt levels responsibly.

The well-developed financial markets that exist in the United States have allowed us to achieve a higher standard of living than would otherwise be possible.

What major factor(s) led to the U.S.economic woes which started in 2007?

If you pursue a business career in a nonfinance profession you will not be exposed to finance concepts on the job.

The finance function is fairly independent of most other corporate functions.Marketing decisions, for example, might affect the firm's need for funds but are not affected by conditions in financial markets or other financing issues.

The electronic revolution has not really caught on in finance, primarily because finance decision making is a localized, private function that a firm does not wish to disclose to outsiders.

The history of banking in the United States is one of continuous regulation to ensure the safety of our banking institution.For this reason, little deregulation has taken place.

Much of the recent legislation enacted by the government has focused on the regulating of previously unregulated industries such as financial services and utilities.

During the 1930s, investment experts suggested that stock value should be determined by computing the present value of the future cash flows associated with the stock.

Managerial finance entails making decisions about

Which of the following is NOT one of the most important trends in managerial finance from the 1990s that continued into the twenty-first century?