Copyrightp©p2019pMcGraw-HillpEducation.pAllprightspreserved.
NopreproductionporpdistributionpwithoutptheppriorpwrittenpconsentpofpMcGraw-HillpEducation.
,FoundationspofpFinancialpManagement,p18ep(Block)
Chapterp1 ThepGoalspandpActivitiespofpFinancialpManagement
1) Aspfinancepemergedpaspapnewpfield,pmuchpemphasispwaspplacedponpmergerspandpacquisitions.
Answer:p TRUEpDiffi
culty:p1pEasy
Topic:p p Introductionptopcorporatepfinance
LearningpObjective: 01-
01pThepfieldpofpfinancepintegratespconceptspfrompeconomics,paccounting,pandpapnumberpofpotherpare
as.
Bloom's:
Rememberp AACSB
: pReflectivepThinking
Accessibility: KeyboardpNavigation
2) Inflationpispassumedptopbepaptemporarypproblempthatpdoespnotpaffectpfinancialpdecisions.
Answer:p FALSEpDif
ficulty:p1pEasy
Topic: Financialpmanagementpdecisions
LearningpObjective: 01-
01pThepfieldpofpfinancepintegratespconceptspfrompeconomics,paccounting,pandpapnumberpofpotherpare
as.
Bloom's:
Rememberp AACSB
: pReflectivepThinking
Accessibility: KeyboardpNavigation
3) Financialpcapitalpispcomposedpofplong-
termpplantpandpequipment,paspwellpaspotherptangiblepinvestments.
Answer:p FALSEpDif
ficulty:p1pEasy
Topic:p p Introductionptopcorporatepfinance
LearningpObjective: 01-
01pThepfieldpofpfinancepintegratespconceptspfrompeconomics,paccounting,pandpapnumberpofpotherpare
as.
Bloom's:
Rememberp AACSB
: pReflectivepThinking
Accessibility: KeyboardpNavigation
4) Realpcapitalpispcomposedpofplong-termpplantpandpequipment.
Answer:p TRUEpDiffi
2
Copyrightp©p2019pMcGraw-HillpEducation.pAllprightspreserved.
NopreproductionporpdistributionpwithoutptheppriorpwrittenpconsentpofpMcGraw-HillpEducation.
,culty:p1pEasy
Topic:p p Introductionptopcorporatepfinance
LearningpObjective: 01-
01pThepfieldpofpfinancepintegratespconceptspfrompeconomics,paccounting,pandpapnumberpofpotherpare
as.
Bloom's: Remember
AACSB:p ReflectivepThinkingpAcces
sibility:p p KeyboardpNavigation
5) Duringpthep1930s,pfinancialppracticeprevolvedparoundpsuchptopicspasptheppreservationpofpcapital,p
maintenancepofpliquidity,pthepreorganizationpofpfinanciallyptroubledpcorporations,pandpbankruptcy.
Answer:p TRUEpDiffi
culty:p1pEasy
Topic:p p Introductionptopcorporatepfinance
LearningpObjective: 01-
01pThepfieldpofpfinancepintegratespconceptspfrompeconomics,paccounting,pandpapnumberpofpotherpare
as.
Bloom's:
Rememberp AACSB
: pReflectivepThinking
Accessibility: KeyboardpNavigation
6) Inpthepmidp1950s,pfinancepbeganptopchangeptopapmorepanalytical,pdecision-orientedpapproach.
Answer:p TRUEpDiffi
culty:p1pEasy
Topic:p p Introductionptopcorporatepfinance
LearningpObjective: 01-
01pThepfieldpofpfinancepintegratespconceptspfrompeconomics,paccounting,pandpapnumberpofpotherpare
as.
Bloom's:
Rememberp AACSB
: pReflectivepThinking
Accessibility: KeyboardpNavigation
7) Recently,pthepemphasispofpfinancialpmanagementphaspbeenponptheprelationshippbetweenpriskpandpr
eturn.
Answer:p TRUEpDiffi
culty:p1pEasy
Topic:p p Introductionptopcorporatepfinance
LearningpObjective:p 01-
01pThepfieldpofpfinancepintegratespconceptspfrompeconomics,paccounting,pandpapnumberpofpotherpare
as.;p01-03pTheprelationshippofpriskptopreturnpispapcentralpfocuspofpfinance.pBloom's:p Understand
AACSB:p AnalyticalpThinkingpAcces
sibility:p p KeyboardpNavigation
3
Copyrightp©p2019pMcGraw-HillpEducation.pAllprightspreserved.
NopreproductionporpdistributionpwithoutptheppriorpwrittenpconsentpofpMcGraw-HillpEducation.
, 8) ThepfirstpNobelpPrizespgivenptopfinancepprofessorspwerepforptheirpcontributionsptopcapitalps
tructureptheorypandpportfolioptheoriespofpriskpandpreturn.
Answer:p TRUEpDiffi
culty:p1pEasy
Topic:p p Introductionptopcorporatepfinance
LearningpObjective: 01-
01pThepfieldpofpfinancepintegratespconceptspfrompeconomics,paccounting,pandpapnumberpofpotherpare
as.
Bloom's: Remember
AACSB:
ReflectivepThinkingpAcce
ssibility: KeyboardpNavigation
9) Howpinvestorsphandlepriskpispanpimportantptopicpthatpusuallyponlypeconomistspobserve.
Answer:p p FALSE
Explanation:
Behavioralpfinancepispsomethingpthatpthepfinancepindustrypputspheavypemphasispon.p
Difficulty:p1pEasy
Topic:p p Introductionptopcorporatepfinance
LearningpObjective: 01-
01pThepfieldpofpfinancepintegratespconceptspfrompeconomics,paccounting,pandpapnumberpofpotherpare
as.
Bloom's:
Rememberp AACSB
: pReflectivepThinking
Accessibility: KeyboardpNavigation
10) Mortgage-
backedpsecuritiespwerepdevaluedpbypaccountingpstandardspbecausepofpthephighpcreditpratingsp(AAA).
Answer:p p FALSE
Explanation:p Thesepsecuritiespwerepdevaluedpbecausepborrowerspdefaultedponptheirploanspandpdidn'
tphavepthepfinancialpmeansptopbackpupptheirploanspinpotherpways.
Difficulty:p1pEasy
Topic:p p Introductionptopcorporatepfinance
LearningpObjective: 01-
01pThepfieldpofpfinancepintegratespconceptspfrompeconomics,paccounting,pandpapnumberpofpotherpare
as.
Bloom's:
Rememberp AACSB
: pReflectivepThinking
Accessibility: KeyboardpNavigation
11) "Creditpdefaultpswaps"pareponepofpseveralptoolspthatpCongresspandpthepPresidentpofpthepUnitedpS
4
Copyrightp©p2019pMcGraw-HillpEducation.pAllprightspreserved.
NopreproductionporpdistributionpwithoutptheppriorpwrittenpconsentpofpMcGraw-HillpEducation.