1
Student: _______________________________________________________________________________________
1. As finance emerged as an analytical, decision oriented discipline, the initial emphasis was placed on capital acq
True False
2. Inflation is assumed to be a temporary problem that does not affect financial decisions.
True False
3. Timing is not a particularly important consideration in financial decisions.
True False
4. Institutional investors have had increasing influence over corporations with their ability to vote large blocks of s
performing boards of directors.
True False
5. Insider trading involves the use of information not available to the general public to make profits from trading i
True False
6. Agency theory assumes that corporate managers act to increase the wealth of corporate shareholders.
True False
7. During the 1930s, the provincial government assumed a much greater role in regulating the securities industry.
True False
8. The higher the profit of a firm, the higher the value the firm is assured of receiving in the market.
True False
9. Social responsibility and profit maximization are synonymous.
True False
10. There is unlimited liability in a general partnership.
True False
11. In the mid 1950s, finance began to change to a more analytical, decision oriented approach.
True False
12. There are some serious problems with the financial goal of maximizing the earnings of the firm.
True False
13. Maximizing the earnings of the firm is the goal of financial management.
True False
,20. In terms of revenues and profits, the corporation is by far the most important form of business organization in C
True False
21. Dividends paid to corporate shareholders have already been taxed once as corporate income.
True False
22. One advantage of the corporate form of organization is that income received by shareholders is not taxable sinc
taxes on the income distributed.
True False
23. A corporation must have at least 35 shareholders.
True False
24. Profits of a manufacturing corporation are taxed at the same rates as all other corporations.
True False
25. Recently, the emphasis of financial management has been on the relationships between risk and return.
True False
26. The formation of a corporation is a way to circumvent personal liability.
True False
27. The secondary market characteristically has had stable prices over the past 20 years.
True False
28. The first Nobel Prizes given to finance professors was for their contributions to capital structure theory and port
return.
True False
29. Financial markets exist as a vast global network of individuals and financial institutions that may be lenders, bo
companies worldwide.
True False
30. Inflation has led to phantom profits and undervalued assets.
True False
31. Money markets refer to those markets dealing with short-term securities having a life of one year or less.
True False
32. Capital markets refer to those markets dealing with short-term securities having a life of one year or less.
True False
33. New issues are sold in the secondary market.
True False
, True False
41. Honesty in business requires timely and full disclosure of pertinent firm developments.
True False
42. Businesses will increasingly rely on B2B Internet applications to speed up cash flows.
True False
43. Issues over corporate governance are often agency problems.
True False
44. What is the primary goal of financial management?
A. Increased earnings
B. Maximizing cash flow
C. Maximizing shareholder wealth
D. Minimizing risk of the firm
45. Proper risk-return management means that
A. the firm should take as few risks as possible.
B. consistent with the objectives of the firm, an appropriate trade-off between risk and return should be determined
C. the firm should earn the highest return possible.
D. the firm should value future profits more highly than current profits.
46. Which of the following is not a major area of concern and emphasis in modern financial management and in thi
A. Inflation and its effect on profits
B. Stable short-term interest rates
C. Changing international environment
D. Increased reliance on debt
47. Which of the following is not a major area of concern and emphasis in modern financial management and in thi
A. Marginal analysis
B. Risk-return trade-off
C. Commodity trading
D. Changing financial institutions
48. The effect of the high rates of inflation experienced during the 1970s and early 1980s was to make
A. financial forecasting more difficult.
B. cost of capital calculations more uncertain.
C. capital budgeting decisions less reliable.
D. all of the other answers are correct
49. In the past, the study of finance has included
A. securities legislation.
B. raising capital.
C. mergers and acquisitions.
D. all of the other answers are correct
50. A financial manager's goal of maximizing current or short-term earnings may not be appropriate because
Student: _______________________________________________________________________________________
1. As finance emerged as an analytical, decision oriented discipline, the initial emphasis was placed on capital acq
True False
2. Inflation is assumed to be a temporary problem that does not affect financial decisions.
True False
3. Timing is not a particularly important consideration in financial decisions.
True False
4. Institutional investors have had increasing influence over corporations with their ability to vote large blocks of s
performing boards of directors.
True False
5. Insider trading involves the use of information not available to the general public to make profits from trading i
True False
6. Agency theory assumes that corporate managers act to increase the wealth of corporate shareholders.
True False
7. During the 1930s, the provincial government assumed a much greater role in regulating the securities industry.
True False
8. The higher the profit of a firm, the higher the value the firm is assured of receiving in the market.
True False
9. Social responsibility and profit maximization are synonymous.
True False
10. There is unlimited liability in a general partnership.
True False
11. In the mid 1950s, finance began to change to a more analytical, decision oriented approach.
True False
12. There are some serious problems with the financial goal of maximizing the earnings of the firm.
True False
13. Maximizing the earnings of the firm is the goal of financial management.
True False
,20. In terms of revenues and profits, the corporation is by far the most important form of business organization in C
True False
21. Dividends paid to corporate shareholders have already been taxed once as corporate income.
True False
22. One advantage of the corporate form of organization is that income received by shareholders is not taxable sinc
taxes on the income distributed.
True False
23. A corporation must have at least 35 shareholders.
True False
24. Profits of a manufacturing corporation are taxed at the same rates as all other corporations.
True False
25. Recently, the emphasis of financial management has been on the relationships between risk and return.
True False
26. The formation of a corporation is a way to circumvent personal liability.
True False
27. The secondary market characteristically has had stable prices over the past 20 years.
True False
28. The first Nobel Prizes given to finance professors was for their contributions to capital structure theory and port
return.
True False
29. Financial markets exist as a vast global network of individuals and financial institutions that may be lenders, bo
companies worldwide.
True False
30. Inflation has led to phantom profits and undervalued assets.
True False
31. Money markets refer to those markets dealing with short-term securities having a life of one year or less.
True False
32. Capital markets refer to those markets dealing with short-term securities having a life of one year or less.
True False
33. New issues are sold in the secondary market.
True False
, True False
41. Honesty in business requires timely and full disclosure of pertinent firm developments.
True False
42. Businesses will increasingly rely on B2B Internet applications to speed up cash flows.
True False
43. Issues over corporate governance are often agency problems.
True False
44. What is the primary goal of financial management?
A. Increased earnings
B. Maximizing cash flow
C. Maximizing shareholder wealth
D. Minimizing risk of the firm
45. Proper risk-return management means that
A. the firm should take as few risks as possible.
B. consistent with the objectives of the firm, an appropriate trade-off between risk and return should be determined
C. the firm should earn the highest return possible.
D. the firm should value future profits more highly than current profits.
46. Which of the following is not a major area of concern and emphasis in modern financial management and in thi
A. Inflation and its effect on profits
B. Stable short-term interest rates
C. Changing international environment
D. Increased reliance on debt
47. Which of the following is not a major area of concern and emphasis in modern financial management and in thi
A. Marginal analysis
B. Risk-return trade-off
C. Commodity trading
D. Changing financial institutions
48. The effect of the high rates of inflation experienced during the 1970s and early 1980s was to make
A. financial forecasting more difficult.
B. cost of capital calculations more uncertain.
C. capital budgeting decisions less reliable.
D. all of the other answers are correct
49. In the past, the study of finance has included
A. securities legislation.
B. raising capital.
C. mergers and acquisitions.
D. all of the other answers are correct
50. A financial manager's goal of maximizing current or short-term earnings may not be appropriate because
