FIN 202 Full Exam Testbank | With complete solu on|
Ques ons and answers | New 2026
QN=1 (20283) Which of the following does maximizing shareholder wealth not usually account
for?
a. Risk.
b. Government regula(on.
c. The (ming of cash flows.
d. Amount of cash flows.
B
QN=2 (20262) Financial markets in which equity and debt instruments with maturi(es greater
than one year are traded are called
a. money markets.
b. capital markets.
c. stock markets.
d. none of these.
B
QN=3 (20269) Which of the following organiza(onal forms is subject to the most SEC
regula(ons?
a. sole proprietorship
b. partnership
c. private corpora(on
d. public corpora(on
D
QN=4 (20263) Profitability of a firm can be nega(vely affected by
a. (i) too much inventory.
b. (ii) too li;le inventory.
c. either (i) or (ii).
d. neither (i) nor (ii).
C
QN=5 (20278) Which of the following can help align the behavior of managers with the goals of
shareholders?
,a. management compensa(on
b. managerial labor markets
c. an independent board of directors
d. all of these
D
QN=6 (20279) Execu(ves that repeatedly put their own interests before that of the firm may
find that they have difficulty finding another job a?er their current one. This is an example of
a. the managerial labor market disciplining managers.
b. the market for corporate control.
c. the board of directors affec(ng the prospects of a manager.
d. none of these.
A
QN=7 (20271) Which of the following is responsible for seeing that the best possible financial
analysis is presented?
a. CFO
b. CEO
c. board of directors
d. audit commi;ee
A
QN=8 (20276) Shareholders elect ______________ to represent their interest in the firm.
a. a chairman
b. CEO
c. a board of directors
d. all of these
C
QN=9 (20253) A trademark is an example of
a. a produc(ve asset.
b. an intangible asset.
c. a nebulous asset.
d. none of these.
B
QN=10 (20250) A stakeholder is
a. anyone geographically close to the firm's headquarters.
,b. anyone with a claim on the cash flows of the firm.
c. any governmental agency.
d. all of these.
B
QN=11 (20281) _____________occur(s) when one party in a business transac(on has
informa(on that is unavailable to the other par(es in the transac(on.
a. Profits
b. Informa(on asymmetry
c. Informa(on efficiency
d. None of these
B
QN=12 (20273) When analysts and investors determine the value of a firm's stock, they should
consider
a. the size of the expected cash flows associated with owning the stock.
b. the (ming of the cash flows.
c. the riskiness of the cash flows.
d. all of these.
D
QN=13 (20267) Which of the following cannot be engaged in managing the business?
a. a sole proprietor
b. a general partner
c. a limited partner
d. none of these
C
QN=14 (20258) Capital budge(ng involves
a. how a firm's day-to-day financial ma;ers should be managed.
b. how the firm should finance its assets.
c. which produc(ve assets the firm should employ.
d. all of these.
C
QN=15 (20272) Which of the following is an appropriate goal for the firm?
a. profit maximiza(on
b. revenue maximiza(on
, c. shareholder wealth maximiza(on
d. tax minimiza(on
C
QN=16 (20277) An example of a direct agency cost is
a. a manager turning down a value-contribu(ng project because of its risks.
b. a manager expensing a large dinner on the company expense report.
c. a manager using too li;le debt within the firm's capital structure because of the addi(onal
risk associated with debt.
d. all of these
B
QN=17 (20256) Cash dividends are paid out of
a. residual cash.
b. liquidated assets.
c. long-term debt.
d. all of these.
A
QN=18 (20252) Which of the following are stakeholders?
a. a shareholder
b. a lender
c. the IRS
d. all of these
D
QN=19 (20260) Capital budge(ng decisions generally involve
a. the fixed asset por(on of the balance sheet.
b. the short-term por(on of the balance sheet.
c. the current liability por(on of the balance sheet.
d. all of these.
A
QN=20 (20266) Which of the following owners is protected by limited liability?
a. a sole proprietor
b. a general partner
c. a limited partner
d. none of these
Ques ons and answers | New 2026
QN=1 (20283) Which of the following does maximizing shareholder wealth not usually account
for?
a. Risk.
b. Government regula(on.
c. The (ming of cash flows.
d. Amount of cash flows.
B
QN=2 (20262) Financial markets in which equity and debt instruments with maturi(es greater
than one year are traded are called
a. money markets.
b. capital markets.
c. stock markets.
d. none of these.
B
QN=3 (20269) Which of the following organiza(onal forms is subject to the most SEC
regula(ons?
a. sole proprietorship
b. partnership
c. private corpora(on
d. public corpora(on
D
QN=4 (20263) Profitability of a firm can be nega(vely affected by
a. (i) too much inventory.
b. (ii) too li;le inventory.
c. either (i) or (ii).
d. neither (i) nor (ii).
C
QN=5 (20278) Which of the following can help align the behavior of managers with the goals of
shareholders?
,a. management compensa(on
b. managerial labor markets
c. an independent board of directors
d. all of these
D
QN=6 (20279) Execu(ves that repeatedly put their own interests before that of the firm may
find that they have difficulty finding another job a?er their current one. This is an example of
a. the managerial labor market disciplining managers.
b. the market for corporate control.
c. the board of directors affec(ng the prospects of a manager.
d. none of these.
A
QN=7 (20271) Which of the following is responsible for seeing that the best possible financial
analysis is presented?
a. CFO
b. CEO
c. board of directors
d. audit commi;ee
A
QN=8 (20276) Shareholders elect ______________ to represent their interest in the firm.
a. a chairman
b. CEO
c. a board of directors
d. all of these
C
QN=9 (20253) A trademark is an example of
a. a produc(ve asset.
b. an intangible asset.
c. a nebulous asset.
d. none of these.
B
QN=10 (20250) A stakeholder is
a. anyone geographically close to the firm's headquarters.
,b. anyone with a claim on the cash flows of the firm.
c. any governmental agency.
d. all of these.
B
QN=11 (20281) _____________occur(s) when one party in a business transac(on has
informa(on that is unavailable to the other par(es in the transac(on.
a. Profits
b. Informa(on asymmetry
c. Informa(on efficiency
d. None of these
B
QN=12 (20273) When analysts and investors determine the value of a firm's stock, they should
consider
a. the size of the expected cash flows associated with owning the stock.
b. the (ming of the cash flows.
c. the riskiness of the cash flows.
d. all of these.
D
QN=13 (20267) Which of the following cannot be engaged in managing the business?
a. a sole proprietor
b. a general partner
c. a limited partner
d. none of these
C
QN=14 (20258) Capital budge(ng involves
a. how a firm's day-to-day financial ma;ers should be managed.
b. how the firm should finance its assets.
c. which produc(ve assets the firm should employ.
d. all of these.
C
QN=15 (20272) Which of the following is an appropriate goal for the firm?
a. profit maximiza(on
b. revenue maximiza(on
, c. shareholder wealth maximiza(on
d. tax minimiza(on
C
QN=16 (20277) An example of a direct agency cost is
a. a manager turning down a value-contribu(ng project because of its risks.
b. a manager expensing a large dinner on the company expense report.
c. a manager using too li;le debt within the firm's capital structure because of the addi(onal
risk associated with debt.
d. all of these
B
QN=17 (20256) Cash dividends are paid out of
a. residual cash.
b. liquidated assets.
c. long-term debt.
d. all of these.
A
QN=18 (20252) Which of the following are stakeholders?
a. a shareholder
b. a lender
c. the IRS
d. all of these
D
QN=19 (20260) Capital budge(ng decisions generally involve
a. the fixed asset por(on of the balance sheet.
b. the short-term por(on of the balance sheet.
c. the current liability por(on of the balance sheet.
d. all of these.
A
QN=20 (20266) Which of the following owners is protected by limited liability?
a. a sole proprietor
b. a general partner
c. a limited partner
d. none of these
