Test Bank - Financial Management: Core Concepts, 5th Edition – Raymond Brooks, Jimmy Yang – ISBN 9780135355817 (Chapters 1–18)

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Financial
Management Core
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Concepts 5th Edition
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TEST BANK
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Raymond Brooks
Jimmy Yang
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Comprehensive Test Bank for Instructors
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and Students
© Raymond Brooks & Jimmy Yang. All rights
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reserved. Reproduction or distribution without
permission is prohibited.
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9780135355817




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Test Bank — jiuhFinancial Management: Core Concepts, 5th Edition
Authors: Raymond Brooks, Jimmy Yang
ISBN: 9780135355817



PART 1: Fundamental Concepts and Basic Tools of Finance
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Chapter 1: Financial Management
Chapter 2: Financial Statements
Chapter 3: The Time Value of Money (Part 1)
Chapter 4: The Time Value of Money (Part 2)
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Chapter 5: Interest Rates



PART 2: Valuing Stocks and Bonds and Understanding Risk and Return
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Chapter 6: Bonds and Bond Valuation
Chapter 7: Stocks and Stock Valuation
Chapter 8: Risk and Return
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PART 3: Capital Budgeting
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Chapter 9: Capital Budgeting Decision Models
Chapter 10: Cash Flow Estimation
Chapter 11: The Cost of Capital
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PART 4: Financial Planning and Evaluating Performance

Chapter 12: Forecasting and Short-Term Financial Planning
Chapter 13: Working Capital Management
Chapter 14: Financial Ratios and Firm Performance
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PART 5: Other Selected Finance Topics
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Chapter 15: Raising Capital
Chapter 16: Capital Structure
Chapter 17: Dividends, Dividend Policy, and Stock Splits
Chapter 18: International Financial Management




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, TEST BANK FOR
Financial Management Core Concepts, 5th edition Raymond Brooks Jimmy Yang
Chapter 1-18
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Chapter 1 Financial Management

1.1 The Cycle of Money

1) At its most basic level, the function of financial intermediaries is to ________.
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A) track and report interest rates
B) move money from lenders to borrowers and back again
C) report all financial transactions to the federal government
D) effect a transfer of wealth in society
Answer: B
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Diff: 1
Topic: 1.1 The Cycle of Money
AACSB: Analytical Thinking
LO: 1.1 Describe the cycle of money, the participants in the cycle, and the common objective of
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borrowing and lending.

2) Which of the following is NOT an example of a financial transaction?
A) Your parents use their credit card to pay for your current term's college tuition.
B) You use the ATM at Heathrow airport in London to withdraw British pounds.
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C) Your roommate lends you $20 and you repay it in one week.
D) All of the above are financial transactions.
Answer: D
Diff: 2
Topic: 1.1 The Cycle of Money
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AACSB: Analytical Thinking
LO: 1.1 Describe the cycle of money, the participants in the cycle, and the common objective of
borrowing and lending.

3) The movement of money from lender to borrower and back again is known as ________.
A) the circle of life
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B) corporate finance
C) the cycle of money
D) money laundering
Answer: C
Diff: 1
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Topic: 1.1 The Cycle of Money
AACSB: Analytical Thinking
LO: 1.1 Describe the cycle of money, the participants in the cycle, and the common objective of
borrowing and lending.
Hmwrk Questions: * Taken from "Prepping for Exams" questions at the end of the chapter.



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, 4) The common objective of borrowing and lending is to ________.
A) make all parties better off
B) gain a profit at the other's expense
C) make a firm or individual appear more liquid than is really the case
D) thwart regulatory authority
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Answer: A
Diff: 1
Topic: 1.1 The Cycle of Money
AACSB: Analytical Thinking
LO: 1.1 Describe the cycle of money, the participants in the cycle, and the common objective of
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borrowing and lending.

5) Which of the following is NOT a function of a financial intermediary in the
lending/borrowing process?
A) To help establish terms of the lending/borrowing agreement
B) To match the borrower and the lender
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C) To bear the risk that the lender will not repay
D) To bear the risk that the borrower will not repay
Answer: C
Diff: 1
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Topic: 1.1 The Cycle of Money
AACSB: Analytical Thinking
LO: 1.1 Describe the cycle of money, the participants in the cycle, and the common objective of
borrowing and lending.
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6) Professor Gaston, your History teacher, borrows money at a rate of 6% per year from the
Valley State Bank for a tuition loan for her son. You have $1,200 deposited into your checking
account at the same bank earning a rate of 0.5% per year. Which of the following statements is
TRUE?
A) The bank is criminally liable to you for paying an interest rate lower than the expected rate of
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inflation.
B) You and your professor have an obvious conflict of interest because you have accounts at the
same financial institution.
C) You benefit from earning interest on your deposit, safety for your funds, and having a
recognizable means for paying for your financial obligations without having to hold cash.
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D) Your professor is the only party to be made worse off by this example because she is the only
party paying net interest.
Answer: C
Explanation: Both you and your professor are using services typically provided by banks. There
is no conflict of interest.
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Diff: 2
Topic: 1.1 The Cycle of Money
AACSB: Analytical Thinking
LO: 1.1 Describe the cycle of money, the participants in the cycle, and the common objective of
borrowing and lending.



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