FIN 300 Exam Unit 1 Questions Solved 100%
Correct | Verified Answers
T/F:Financial management deals with the maintenance and creation of economic value
or wealth - ANSWER True
T/F: The fundamental goal of a business is to maximize the retained earning to the
corporation's shareholders - ANSWER False
T/F: The payment of a dividend to current shareholders will have no impact on a
corporation's share price because the cash paid is not available to future potential
shareholders who may want to buy the corporation's stock - ANSWER False
T/F: Only a firm's financial decisions affect its stock prices - ANSWER False
The primary goal of a publicly owned corporation is to... - ANSWER maximize
shareholder wealth
A financial manager is considering two projects, A and B. A is expected to add $2 million
to profits this year while B is expected to add $1 million to profits this year. Which of the
following statements is MOST correct? - ANSWER A. The manager should select the
project that causes the stock price to increase the most, which could be A or B.
Shareholder wealth maximization means - ANSWER maximizing the price of existing
common stock
Which of the following goals of the firm are synonymous (equivalent) to the
maximization of shareholder wealth? - ANSWER maximization of the total market value
of the firm's common stock
, Which of the following is the most important goal that a corporation should strive for? -
ANSWER maximize shareholder wealth
T/F: When making financial decisions, managers should always look at marginal, or
incremental cash flows - ANSWER true
An investment project is acceptable if the total cash received over the life of the project
exceeds the total cash spent over the life of the project - ANSWER false
T/F: Cash flows and profits are synonymous; in other words, higher cash flows equal
higher profits - ANSWER false
T/F: the risk-return trade- off implies that the return on a riskless asset must be zero -
ANSWER false
T/F: An efficient market is one where the prices of the assets traded in that market fully
reflect all available info. at any instant in time - ANSWER true
T/F: Beginning in 2007 the United States experienced its most severe financial crisis
since the Great Depression of the 1930s - ANSWER true
To measure value, the concept of time value of money is used - ANSWER to bring the
future benefits and costs of a project, measured by its cash flows, back to the present
The expected return on a riskless asset is greater than zero due to - ANSWER an
expected return for delaying consumption
Correct | Verified Answers
T/F:Financial management deals with the maintenance and creation of economic value
or wealth - ANSWER True
T/F: The fundamental goal of a business is to maximize the retained earning to the
corporation's shareholders - ANSWER False
T/F: The payment of a dividend to current shareholders will have no impact on a
corporation's share price because the cash paid is not available to future potential
shareholders who may want to buy the corporation's stock - ANSWER False
T/F: Only a firm's financial decisions affect its stock prices - ANSWER False
The primary goal of a publicly owned corporation is to... - ANSWER maximize
shareholder wealth
A financial manager is considering two projects, A and B. A is expected to add $2 million
to profits this year while B is expected to add $1 million to profits this year. Which of the
following statements is MOST correct? - ANSWER A. The manager should select the
project that causes the stock price to increase the most, which could be A or B.
Shareholder wealth maximization means - ANSWER maximizing the price of existing
common stock
Which of the following goals of the firm are synonymous (equivalent) to the
maximization of shareholder wealth? - ANSWER maximization of the total market value
of the firm's common stock
, Which of the following is the most important goal that a corporation should strive for? -
ANSWER maximize shareholder wealth
T/F: When making financial decisions, managers should always look at marginal, or
incremental cash flows - ANSWER true
An investment project is acceptable if the total cash received over the life of the project
exceeds the total cash spent over the life of the project - ANSWER false
T/F: Cash flows and profits are synonymous; in other words, higher cash flows equal
higher profits - ANSWER false
T/F: the risk-return trade- off implies that the return on a riskless asset must be zero -
ANSWER false
T/F: An efficient market is one where the prices of the assets traded in that market fully
reflect all available info. at any instant in time - ANSWER true
T/F: Beginning in 2007 the United States experienced its most severe financial crisis
since the Great Depression of the 1930s - ANSWER true
To measure value, the concept of time value of money is used - ANSWER to bring the
future benefits and costs of a project, measured by its cash flows, back to the present
The expected return on a riskless asset is greater than zero due to - ANSWER an
expected return for delaying consumption
