Test Bank for
OpenStax’s Principles of
Finance-TestBank-
(Ch 01-20)
2025/2026
Expert-Verified Questions and
Answers
, TEST BANK
Test Bank for Principles of Finance
Principles of Finance
s
03/30/22 1
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, Test Bank for Principles of Finance
Principles of Finance
Chapter 1
Test Bank
Introduction to Finance
True or False Questions
1. The application of common sense is sufficient for companies to manage their financial
operations.
A. True
B. False
Section 1.1 LO 1 Easy
2. The Financial Industry Regulatory Authority (FINRA) is a US federal institution charged with
enforcement of US financial regulations.
A. True
B. False
Section 1.1 LO 3 Moderate
3. The key common feature of market brokers and dealers is that they both act as
intermediaries.
A. True
B. False
Section 1.5 LO 2 Moderate
4. The term broker refers only to financial firms that buy and sell stock.
A. True
B. False
Section 1.5 LO 2 Difficult
Multiple Choice Questions
1. Business finance looks at how managers apply financial principles to maximize the value of a
firm. Who benefits most when the value of the firm is maximized?
A. Management
B. Employees
C. Shareholders
D. Customers
Section 1.1 LO 1 Moderate
03/30/22 2
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, Test Bank for Principles of Finance
Principles of Finance
2. Which of the following areas of finance is a more narrowly focused subfield of one of the
other three areas?
A. Business finance
B. Financial markets and institutions
C. Investments
D. Working capital management
Section 1.1 LO 1 Moderate
3. Financial regulations in the United States were significantly expanded and improved
beginning in the 1930s. What was the primary motivation for this regulatory reform and
improvement?
A. To make financial investing more profitable
B. To make markets safer and increase investor confidence
C. To increase tax receipts for the US government
D. To increase unemployment during the Great Depression
Section 1.1 LO 3 Moderate
4. The concepts of risk and return are fundamental to finance and are seen in many applications.
The relationship between risk and return is ________.
A. direct and positive
B. inverse
C. neutral
D. uncorrelated
Section 1.1 LO 3 Moderate
5. Corporate budgets are important because they provide what to companies?
A. Established objectives for the upcoming period
B. Financial statements to submit to regulators
C. A tax-planning tool
D. Share price targets
Section 1.2 LO 2 Moderate
6. Company managers use financial data extensively to make ongoing business decisions within
the firm. Which of the following are external users of a company’s data?
A. Strategic planning staff
B. Department managers
C. Suppliers
D. Internal auditors
Section 1.3 LO 2 Moderate
03/30/22 3
www.stuvia.com
OpenStax’s Principles of
Finance-TestBank-
(Ch 01-20)
2025/2026
Expert-Verified Questions and
Answers
, TEST BANK
Test Bank for Principles of Finance
Principles of Finance
s
03/30/22 1
www.stuvia.com
, Test Bank for Principles of Finance
Principles of Finance
Chapter 1
Test Bank
Introduction to Finance
True or False Questions
1. The application of common sense is sufficient for companies to manage their financial
operations.
A. True
B. False
Section 1.1 LO 1 Easy
2. The Financial Industry Regulatory Authority (FINRA) is a US federal institution charged with
enforcement of US financial regulations.
A. True
B. False
Section 1.1 LO 3 Moderate
3. The key common feature of market brokers and dealers is that they both act as
intermediaries.
A. True
B. False
Section 1.5 LO 2 Moderate
4. The term broker refers only to financial firms that buy and sell stock.
A. True
B. False
Section 1.5 LO 2 Difficult
Multiple Choice Questions
1. Business finance looks at how managers apply financial principles to maximize the value of a
firm. Who benefits most when the value of the firm is maximized?
A. Management
B. Employees
C. Shareholders
D. Customers
Section 1.1 LO 1 Moderate
03/30/22 2
www.stuvia.com
, Test Bank for Principles of Finance
Principles of Finance
2. Which of the following areas of finance is a more narrowly focused subfield of one of the
other three areas?
A. Business finance
B. Financial markets and institutions
C. Investments
D. Working capital management
Section 1.1 LO 1 Moderate
3. Financial regulations in the United States were significantly expanded and improved
beginning in the 1930s. What was the primary motivation for this regulatory reform and
improvement?
A. To make financial investing more profitable
B. To make markets safer and increase investor confidence
C. To increase tax receipts for the US government
D. To increase unemployment during the Great Depression
Section 1.1 LO 3 Moderate
4. The concepts of risk and return are fundamental to finance and are seen in many applications.
The relationship between risk and return is ________.
A. direct and positive
B. inverse
C. neutral
D. uncorrelated
Section 1.1 LO 3 Moderate
5. Corporate budgets are important because they provide what to companies?
A. Established objectives for the upcoming period
B. Financial statements to submit to regulators
C. A tax-planning tool
D. Share price targets
Section 1.2 LO 2 Moderate
6. Company managers use financial data extensively to make ongoing business decisions within
the firm. Which of the following are external users of a company’s data?
A. Strategic planning staff
B. Department managers
C. Suppliers
D. Internal auditors
Section 1.3 LO 2 Moderate
03/30/22 3
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