CHAPTER 1: AN OVERVIEW OF FINANCIAL MANAGEMENT EXAM QUESTIONS AND ANSWERS 100% CORRECT!!

CHAPTER 1: AN OVERVIEW OF FINANCIAL
MANAGEMENT EXAM QUESTIONS AND
ANSWERS 100% CORRECT!!

, C - ANSWER The goal of the firm is always ____________________.
a. Maximize manager wealth
b. Mitigate manager wealth
c. Maximize shareholder wealth
d. None of the above

B - ANSWER Which of the following is the disadvantage of a corporation?
a. Unlimited personal liability
b. Double taxed
c. Difficult to raise large capital
d. Complicated to structure

A - ANSWER Which of the following is NOT an advantage of a proprietorship?
a. Easier to transfer shares of stocks
b. Easy and inexpensive to form
c. Subject to few government regulations
d. Subject to lower income taxes

False - ANSWER True or False: Management' goal should be to take actions designed
to maximize the market price.

D - ANSWER Which of the following CANNOT affect managerial behavior to solve the
stockholder-manager conflicts?
a. Reasonable compensation package
b. Threat of hostile takeover
c. Direct stockholder intervention
d. Engaging in risky transactions

B - ANSWER Which of the following is NOT a duty of CFO?
a. Accounting
b. Marketing
c. Treasury
d. Capital budgeting

True - ANSWER True or False: Intrinsic value is the stock's true value estimated by
analysts.