Foundations of Financial Management, 17e (Block) fe fe fe fe fe
Chapter 1 The Goals and Activities of Financial Management
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1) As finance emerged as a new field, much emphasis was placed on mergers and acquisitions.
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Answer: TRUE f e
Difficulty: 1 Easy
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Topic: Introduction to corporate finance
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Learning Objective: 01-01 The field of finance integrates concepts from economics, accounting,
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and a number of other areas.
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Bloom's: Remember
AACSB: Reflective Thinking
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Accessibility: Keyboard Navigation fe
2) Inflation is assumed to be a temporary problem that does not affect financial decisions.
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Answer: FALSE f e
Difficulty: 1 Easy
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Topic: Financial management decisions fe fe
Learning Objective: 01-01 The field of finance integrates concepts from economics, accounting,
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and a number of other areas.
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Bloom's: Remember
AACSB: Reflective Thinking
f e fe fe
Accessibility: Keyboard Navigation fe
3) Financial capital is composed of long-term plant and equipment, as well as other tangible
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investments.
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Answer: FALSE f e
Difficulty: 1 Easy
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Topic: Introduction to corporate finance
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Learning Objective: 01-01 The field of finance integrates concepts from economics, accounting,
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and a number of other areas.
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Bloom's: Remember
AACSB: Reflective Thinking
f e fe fe
Accessibility: Keyboard Navigation fe
4) Real capital is composed of long-term plant and equipment.
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Answer: TRUE f e
Difficulty: 1 Easy
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Topic: Introduction to corporate finance
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Learning Objective: 01-01 The field of finance integrates concepts from economics, accounting,
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and a number of other areas.
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Bloom's: Remember
1
Copyright © 2019 McGraw-Hill Education. All rights reserved. fe fe fe fe fe fe fe
No reproduction or distribution without the prior written consent of McGraw-Hill Education.
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,AACSB: Reflective f e Thinking
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Accessibility:
fe f e f e Keyboard
Navigation
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5) During the 1930s, financial practice revolved around such topics as the preservation of capital,
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maintenance of liquidity, the reorganization of financially troubled corporations, and bankruptcy.
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Answer: TRUE f e
Difficulty: 1 Easy
fe fe fe
Topic: Introduction to corporate finance
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Learning Objective: 01-01 The field of finance integrates concepts from economics, accounting,
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and a number of other areas.
fe fe fe fe fe fe
Bloom's: Remember
AACSB: Reflective Thinking
f e fe fe
Accessibility: Keyboard Navigation fe
6) In the mid 1950s, finance began to change to a more analytical, decision-oriented approach.
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Answer: TRUE f e
Difficulty: 1 Easy
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Topic: Introduction to corporate finance
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Learning Objective: 01-01 The field of finance integrates concepts from economics, accounting,
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and a number of other areas.
fe fe fe fe fe fe
Bloom's: Remember
AACSB: Reflective Thinking
f e fe fe
Accessibility: Keyboard Navigation fe
7) Recently, the emphasis of financial management has been on the relationship between risk and
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return.
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Answer: TRUE f e
Difficulty: 1 Easy
fe fe fe
Topic: Introduction to corporate finance
f e f e fe fe fe
Learning Objective: 01-01 The field of finance integrates concepts from economics, accounting,
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and a number of other areas.; 01-03 The relationship of risk to return is a central focus of finance.
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Bloom's: Understand
fe f e
AACSB: Analytical Thinking f e fe
Accessibility:
fe Keyboard f e f e
Navigation
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8) The first Nobel Prizes given to finance professors were for their contributions to capital
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structure theory and portfolio theories of risk and return.
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Answer: TRUE f e
Difficulty: 1 Easy
fe fe fe
Topic: Introduction to corporate finance
f e f e fe fe fe
Learning Objective: 01-01 The field of finance integrates concepts from economics, accounting,
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2
Copyright © 2019 McGraw-Hill Education. All rights reserved. fe fe fe fe fe fe fe
No reproduction or distribution without the prior written consent of McGraw-Hill Education.
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,and a number of other areas.
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Bloom's: Remember
3
Copyright © 2019 McGraw-Hill Education. All rights reserved.
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No reproduction or distribution without the prior written consent of McGraw-Hill Education.
fe fe fe fe fe fe fe fe fe fe fe
, AACSB: Reflective Thinking fe
Accessibility: Keyboard Navigation
fe fe
9) How investors handle risk is an important topic that usually only economists observe.
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Answer: FALSE f e f e
Explanation: Behavioral finance is something that the finance industry puts heavy emphasis on. fe fe fe fe fe fe fe fe fe fe fe
Difficulty: 1 Easy
fe fe fe
Topic: Introduction to corporate finance
f e f e fe fe fe
Learning Objective: 01-01 The field of finance integrates concepts from economics, accounting,
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and a number of other areas.
fe fe fe fe fe fe
Bloom's: Remember
AACSB: Reflective Thinking
f e fe fe
Accessibility: Keyboard Navigation fe
10) Mortgage-backed securities were devalued by accounting standards because of the high credit
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ratings (AAA).
fe fe
Answer: FALSE f e f e
Explanation: These securities were devalued because borrowers defaulted on their loans and
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didn't have the financial means to back up their loans in other ways.
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Difficulty: 1 Easy fe fe
Topic: Introduction to corporate finance
f e f e fe fe fe
Learning Objective: 01-01 The field of finance integrates concepts from economics, accounting,
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and a number of other areas.
fe fe fe fe fe fe
Bloom's: Remember
AACSB: Reflective Thinking
f e fe fe
Accessibility: Keyboard Navigation fe
11) "Credit default swaps" are one of several tools that Congress and the President of the United
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States have jointly developed to ease the financial crisis that began in 2008.
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Answer: FALSE f e
Difficulty: 1 Easy
fe fe fe
Topic: Introduction to corporate finance
f e f e fe fe fe
Learning Objective: 01-01 The field of finance integrates concepts from economics, accounting,
fe fe fe fe fe fe fe fe fe fe
and a number of other areas.
fe fe fe fe fe fe
Bloom's: Understand
AACSB: Analytical Thinking
fe fe fe
Accessibility: Keyboard Navigation fe
4
Copyright © 2019 McGraw-Hill Education. All rights reserved. fe fe fe fe fe fe fe
No reproduction or distribution without the prior written consent of McGraw-Hill Education.
fe fe fe fe fe fe fe fe fe fe fe
Chapter 1 The Goals and Activities of Financial Management
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1) As finance emerged as a new field, much emphasis was placed on mergers and acquisitions.
fe fe fe fe fe fe fe fe fe fe fe fe fe fe
Answer: TRUE f e
Difficulty: 1 Easy
fe fe fe
Topic: Introduction to corporate finance
f e f e fe fe fe
Learning Objective: 01-01 The field of finance integrates concepts from economics, accounting,
fe fe fe fe fe fe fe fe fe fe
and a number of other areas.
fe fe fe fe fe fe
Bloom's: Remember
AACSB: Reflective Thinking
f e fe fe
Accessibility: Keyboard Navigation fe
2) Inflation is assumed to be a temporary problem that does not affect financial decisions.
fe fe fe fe fe fe fe fe fe fe fe fe fe
Answer: FALSE f e
Difficulty: 1 Easy
fe fe fe
Topic: Financial management decisions fe fe
Learning Objective: 01-01 The field of finance integrates concepts from economics, accounting,
fe fe fe fe fe fe fe fe fe fe
and a number of other areas.
fe fe fe fe fe fe
Bloom's: Remember
AACSB: Reflective Thinking
f e fe fe
Accessibility: Keyboard Navigation fe
3) Financial capital is composed of long-term plant and equipment, as well as other tangible
fe fe fe fe fe fe fe fe fe fe fe fe fe
investments.
fe
Answer: FALSE f e
Difficulty: 1 Easy
fe fe fe
Topic: Introduction to corporate finance
f e f e fe fe fe
Learning Objective: 01-01 The field of finance integrates concepts from economics, accounting,
fe fe fe fe fe fe fe fe fe fe
and a number of other areas.
fe fe fe fe fe fe
Bloom's: Remember
AACSB: Reflective Thinking
f e fe fe
Accessibility: Keyboard Navigation fe
4) Real capital is composed of long-term plant and equipment.
fe fe fe fe fe fe fe fe
Answer: TRUE f e
Difficulty: 1 Easy
fe fe fe
Topic: Introduction to corporate finance
f e f e fe fe fe
Learning Objective: 01-01 The field of finance integrates concepts from economics, accounting,
fe fe fe fe fe fe fe fe fe fe
and a number of other areas.
fe fe fe fe fe fe
Bloom's: Remember
1
Copyright © 2019 McGraw-Hill Education. All rights reserved. fe fe fe fe fe fe fe
No reproduction or distribution without the prior written consent of McGraw-Hill Education.
fe fe fe fe fe fe fe fe fe fe fe
,AACSB: Reflective f e Thinking
fe
Accessibility:
fe f e f e Keyboard
Navigation
fe
5) During the 1930s, financial practice revolved around such topics as the preservation of capital,
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maintenance of liquidity, the reorganization of financially troubled corporations, and bankruptcy.
fe fe fe fe fe fe fe fe fe fe fe
Answer: TRUE f e
Difficulty: 1 Easy
fe fe fe
Topic: Introduction to corporate finance
f e f e fe fe fe
Learning Objective: 01-01 The field of finance integrates concepts from economics, accounting,
fe fe fe fe fe fe fe fe fe fe
and a number of other areas.
fe fe fe fe fe fe
Bloom's: Remember
AACSB: Reflective Thinking
f e fe fe
Accessibility: Keyboard Navigation fe
6) In the mid 1950s, finance began to change to a more analytical, decision-oriented approach.
fe fe fe fe fe fe fe fe fe fe fe fe fe
Answer: TRUE f e
Difficulty: 1 Easy
fe fe fe
Topic: Introduction to corporate finance
f e f e fe fe fe
Learning Objective: 01-01 The field of finance integrates concepts from economics, accounting,
fe fe fe fe fe fe fe fe fe fe
and a number of other areas.
fe fe fe fe fe fe
Bloom's: Remember
AACSB: Reflective Thinking
f e fe fe
Accessibility: Keyboard Navigation fe
7) Recently, the emphasis of financial management has been on the relationship between risk and
fe fe fe fe fe fe fe fe fe fe fe fe fe
return.
fe
Answer: TRUE f e
Difficulty: 1 Easy
fe fe fe
Topic: Introduction to corporate finance
f e f e fe fe fe
Learning Objective: 01-01 The field of finance integrates concepts from economics, accounting,
fe f e fe fe fe fe fe fe fe fe fe
and a number of other areas.; 01-03 The relationship of risk to return is a central focus of finance.
fe fe fe fe fe fe fe fe fe fe fe fe fe fe fe fe fe fe fe
Bloom's: Understand
fe f e
AACSB: Analytical Thinking f e fe
Accessibility:
fe Keyboard f e f e
Navigation
fe
8) The first Nobel Prizes given to finance professors were for their contributions to capital
fe fe fe fe fe fe fe fe fe fe fe fe fe
structure theory and portfolio theories of risk and return.
fe fe fe fe fe fe fe fe fe
Answer: TRUE f e
Difficulty: 1 Easy
fe fe fe
Topic: Introduction to corporate finance
f e f e fe fe fe
Learning Objective: 01-01 The field of finance integrates concepts from economics, accounting,
fe fe fe fe fe fe fe fe fe fe
2
Copyright © 2019 McGraw-Hill Education. All rights reserved. fe fe fe fe fe fe fe
No reproduction or distribution without the prior written consent of McGraw-Hill Education.
fe fe fe fe fe fe fe fe fe fe fe
,and a number of other areas.
fe fe fe fe fe fe
Bloom's: Remember
3
Copyright © 2019 McGraw-Hill Education. All rights reserved.
fe fe fe fe fe fe fe
No reproduction or distribution without the prior written consent of McGraw-Hill Education.
fe fe fe fe fe fe fe fe fe fe fe
, AACSB: Reflective Thinking fe
Accessibility: Keyboard Navigation
fe fe
9) How investors handle risk is an important topic that usually only economists observe.
fe fe fe fe fe fe fe fe fe fe fe fe
Answer: FALSE f e f e
Explanation: Behavioral finance is something that the finance industry puts heavy emphasis on. fe fe fe fe fe fe fe fe fe fe fe
Difficulty: 1 Easy
fe fe fe
Topic: Introduction to corporate finance
f e f e fe fe fe
Learning Objective: 01-01 The field of finance integrates concepts from economics, accounting,
fe fe fe fe fe fe fe fe fe fe
and a number of other areas.
fe fe fe fe fe fe
Bloom's: Remember
AACSB: Reflective Thinking
f e fe fe
Accessibility: Keyboard Navigation fe
10) Mortgage-backed securities were devalued by accounting standards because of the high credit
fe fe fe fe fe fe fe fe fe fe fe
ratings (AAA).
fe fe
Answer: FALSE f e f e
Explanation: These securities were devalued because borrowers defaulted on their loans and
f e fe fe fe fe fe fe fe fe fe fe
didn't have the financial means to back up their loans in other ways.
fe fe fe fe fe fe fe fe fe fe fe fe fe
Difficulty: 1 Easy fe fe
Topic: Introduction to corporate finance
f e f e fe fe fe
Learning Objective: 01-01 The field of finance integrates concepts from economics, accounting,
fe fe fe fe fe fe fe fe fe fe
and a number of other areas.
fe fe fe fe fe fe
Bloom's: Remember
AACSB: Reflective Thinking
f e fe fe
Accessibility: Keyboard Navigation fe
11) "Credit default swaps" are one of several tools that Congress and the President of the United
fe fe fe fe fe fe fe fe fe fe fe fe fe fe fe
States have jointly developed to ease the financial crisis that began in 2008.
fe fe fe fe fe fe fe fe fe fe fe fe fe
Answer: FALSE f e
Difficulty: 1 Easy
fe fe fe
Topic: Introduction to corporate finance
f e f e fe fe fe
Learning Objective: 01-01 The field of finance integrates concepts from economics, accounting,
fe fe fe fe fe fe fe fe fe fe
and a number of other areas.
fe fe fe fe fe fe
Bloom's: Understand
AACSB: Analytical Thinking
fe fe fe
Accessibility: Keyboard Navigation fe
4
Copyright © 2019 McGraw-Hill Education. All rights reserved. fe fe fe fe fe fe fe
No reproduction or distribution without the prior written consent of McGraw-Hill Education.
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