Finance – Exam Review, 2026 – Study Material and
Practice Questions
This subarea of finance involves methods and techniques to make appropriate decisions about
what kinds of securities to own, which firms' securities to buy, and how to be paid back in the
form that the investor wishes. - ANS✔✔ Investments
Financial management involves decisions about which of the following: - ANS✔✔ All the above:
Which projects to fund, How to minimize taxation, and What type of capital should be raise
This subarea of finance is important for adapting to the global economy. - ANS✔✔ International
Finance
Which of the following is the firm's highest-level financial manager? - ANS✔✔ Chief Financial
Officer
This type of business organization is relatively easy to start, and it is subject to much lighter
regulatory and paperwork burden than other business forms. - ANS✔✔ Sole proprietorship
The practice generally known as double taxation is due to - ANS✔✔ corporate incomes being
taxed at the corporate level, then again at the shareholder level when corporate profits are paid
out as dividends.
For corporations, maximizing the value of owner's equity can also be stated as - ANS✔✔
maximizing the stock price.
Which of these are NOT basic approaches to minimizing the agency problem? - ANS✔✔ All of
these are basic approaches to minimizing the agency problem.: Just ignore the conflict of
, interest., Monitor managers' actions., Align managers' personal interest with those of the
owners by making the managers owners.
These individuals help firms access capital markets and advise managers about how to interact
with those capital markets. - ANS✔✔ Investment bankers
The portion of a company's profits that are kept by the company rather than distributed to the
stockholders as cash dividends is referred to as _______________. - ANS✔✔ Retained earnings
All of the following are functions of the board of directors except ________. - ANS✔✔ Provide
reports to the auditors
Which of the following statements is incorrect? - ANS✔✔ Shareholders are responsible for
paying off the corporate bonds in the event of a bankruptcy.
From a taxation perspective, the form of business organization with the highest business level
taxes is the __________. - ANS✔✔ Corporation
TEST 2 - ANS✔✔
We call the process of earning interest on both the original deposit and on the earlier interest
payments: - ANS✔✔ compounding
The process of figuring out how much an amount that you expect to receive in the future is
worth today is called: - ANS✔✔ discounting
The Rule of 72 is a simple mathematical approximation for: - ANS✔✔ the number of years
required to double an investment.
Practice Questions
This subarea of finance involves methods and techniques to make appropriate decisions about
what kinds of securities to own, which firms' securities to buy, and how to be paid back in the
form that the investor wishes. - ANS✔✔ Investments
Financial management involves decisions about which of the following: - ANS✔✔ All the above:
Which projects to fund, How to minimize taxation, and What type of capital should be raise
This subarea of finance is important for adapting to the global economy. - ANS✔✔ International
Finance
Which of the following is the firm's highest-level financial manager? - ANS✔✔ Chief Financial
Officer
This type of business organization is relatively easy to start, and it is subject to much lighter
regulatory and paperwork burden than other business forms. - ANS✔✔ Sole proprietorship
The practice generally known as double taxation is due to - ANS✔✔ corporate incomes being
taxed at the corporate level, then again at the shareholder level when corporate profits are paid
out as dividends.
For corporations, maximizing the value of owner's equity can also be stated as - ANS✔✔
maximizing the stock price.
Which of these are NOT basic approaches to minimizing the agency problem? - ANS✔✔ All of
these are basic approaches to minimizing the agency problem.: Just ignore the conflict of
, interest., Monitor managers' actions., Align managers' personal interest with those of the
owners by making the managers owners.
These individuals help firms access capital markets and advise managers about how to interact
with those capital markets. - ANS✔✔ Investment bankers
The portion of a company's profits that are kept by the company rather than distributed to the
stockholders as cash dividends is referred to as _______________. - ANS✔✔ Retained earnings
All of the following are functions of the board of directors except ________. - ANS✔✔ Provide
reports to the auditors
Which of the following statements is incorrect? - ANS✔✔ Shareholders are responsible for
paying off the corporate bonds in the event of a bankruptcy.
From a taxation perspective, the form of business organization with the highest business level
taxes is the __________. - ANS✔✔ Corporation
TEST 2 - ANS✔✔
We call the process of earning interest on both the original deposit and on the earlier interest
payments: - ANS✔✔ compounding
The process of figuring out how much an amount that you expect to receive in the future is
worth today is called: - ANS✔✔ discounting
The Rule of 72 is a simple mathematical approximation for: - ANS✔✔ the number of years
required to double an investment.
