CF1VS2ES01 - 1
This Corporate Finance Exam consists of
40 multiple choice questions
Good Luck !!
1. Which one of the following terms is defined as the management of a firm's
long - term investments?
A. working capital management
B. financial allocation
C. agency cost analysis
D. capital budgeting
E. capital structure
2. Which one of the following is defined as a firm's short-term assets and its short-
term liabilities?
A. working capital
B. debt
C. investment capital
D. net capital
E. capital structure
3. Which one of the following functions should be the responsibility of the controller
rather than the treasurer?
A. daily cash deposit
B. income tax returns
C. equipment purchase analysis
D. customer credit approval
E. payment to a vendor
4. Which one of the following is a capital structure decision?
A. determining which one of two projects to accept
B. determining how to allocate investment funds to multiple projects
C. determining the amount of funds needed to finance customer purchases of a new
product
D. determining how much debt should be assumed to fund a project
E. determining how much inventory will be needed to support a project
,5. Which one of the following is a working capital management decision?
A. determining the amount of equipment needed to complete a job
B. determining whether to pay cash for a purchase or use the credit offered by the
supplier
C. determining the amount of long-term debt required to complete a project
D. determining the number of shares of stock to issue to fund an acquisition
E. determining whether or not a project should be accepted
6. Why should financial managers strive to maximize the current value per share of
the existing stock?
A. doing so guarantees the company will grow in size at the maximum possible rate
B. doing so increases employee salaries
C. because they have been hired to represent the interests of the current
shareholders
D. because this will increase the current dividends per share
E. because managers often receive shares of stock as part of their compensation
, 7. What is the amount of the net capital spending for 2009?
A. -$382
B. $1,229
C. $1,804
D. $2,375
E. $2,516
This Corporate Finance Exam consists of
40 multiple choice questions
Good Luck !!
1. Which one of the following terms is defined as the management of a firm's
long - term investments?
A. working capital management
B. financial allocation
C. agency cost analysis
D. capital budgeting
E. capital structure
2. Which one of the following is defined as a firm's short-term assets and its short-
term liabilities?
A. working capital
B. debt
C. investment capital
D. net capital
E. capital structure
3. Which one of the following functions should be the responsibility of the controller
rather than the treasurer?
A. daily cash deposit
B. income tax returns
C. equipment purchase analysis
D. customer credit approval
E. payment to a vendor
4. Which one of the following is a capital structure decision?
A. determining which one of two projects to accept
B. determining how to allocate investment funds to multiple projects
C. determining the amount of funds needed to finance customer purchases of a new
product
D. determining how much debt should be assumed to fund a project
E. determining how much inventory will be needed to support a project
,5. Which one of the following is a working capital management decision?
A. determining the amount of equipment needed to complete a job
B. determining whether to pay cash for a purchase or use the credit offered by the
supplier
C. determining the amount of long-term debt required to complete a project
D. determining the number of shares of stock to issue to fund an acquisition
E. determining whether or not a project should be accepted
6. Why should financial managers strive to maximize the current value per share of
the existing stock?
A. doing so guarantees the company will grow in size at the maximum possible rate
B. doing so increases employee salaries
C. because they have been hired to represent the interests of the current
shareholders
D. because this will increase the current dividends per share
E. because managers often receive shares of stock as part of their compensation
, 7. What is the amount of the net capital spending for 2009?
A. -$382
B. $1,229
C. $1,804
D. $2,375
E. $2,516
