TEST BANK FOR Foundations of Finance, 10th edition by J. Keown, John D. Martin ISBN:9780134897264 COMPLETE GUIDE ALL CHAPTERS COVERED 100% VERIFIED A+ GRADE ASSURED!!!!!NEW LATEST UPDATE!!!!!!

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,Foundations of Finance, 10e (Keown/Martin/Petty)
Chapter 1 An Introduction to the Foundations of Financial Management


Learning Objective 1.1


1) Financial management deals with the maintenance and creation of economic value or wealth.
Answer: TRUE
Diff: 1 Page Ref: 3
Keywords: Financial Management
Learning Obj.: L.O. 1.1
AACSB: Reflective Thinking


2) Each financial decision made by a corporate manager can be evaluated by its direct impact on the
corporation's stock price.
Answer: FALSE
Diff: 1 Page Ref: 4
Keywords: Goal of the Firm
Learning Obj.: L.O. 1.1
AACSB: Reflective Thinking


3) The fundamental goal of a business is to maximize the retained earnings available to the corporation's
shareholders.
Answer: FALSE
Diff: 1 Page Ref: 3
Keywords: Goal of the Firm
Learning Obj.: L.O. 1.1
AACSB: Reflective Thinking


4) Shareholder wealth maximization means maximizing the price of the existing common stock.
Answer: TRUE
Diff: 1 Page Ref: 3

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,Keywords: Shareholder Wealth, Goal of the Firm
Learning Obj.: L.O. 1.1
AACSB: Reflective Thinking


5) It is important to evaluate a corporate manager's financial decision by measuring the effect the decision
should have on the corporation's stock price if everything else were held constant.
Answer: TRUE
Diff: 2 Page Ref: 4
Keywords: Goal of the Firm, Maximize Shareholder Wealth
Learning Obj.: L.O. 1.1
AACSB: Reflective Thinking




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, 6) Corporate;managers;should;accept;investment;projects;that;maximize;profits;in;the;short;run;because;o
f;the;time;value;of;money.
Answer:;FALSE;Dif
f:;2 Page;Ref:;4
Keywords:;Goal;of;the;Firm,;Profits,;Time;Value;of;Money;Learning
;Obj.:;L.O.;1.1

AACSB:; Reflective;Thinking


7) The;goal;of;the;firm's;financial;managers;should;be;the;maximization;of;the;total;value;of;the;firm's;st
ock.
Answer:; TRUE;Diff
:;1 Page;Ref:;3
Keywords:;Goal;of;the;Firm;L
earning;Obj.:;L.O.;1.1;AACS
B:; Reflective;Thinking


8) The;payment;of;a;dividend;to;current;shareholders;will;have;no;impact;on;a;corporation's;share;price;b
ecause;the;cash;paid;is;not;available;to;future;potential;shareholders;who;may;want;to;buy;the;corporatio
n's;stock.
Answer:;FALSE;Dif
f:;1 Page;Ref:;4
Keywords:;Goal;of;the;Firm;L
earning;Obj.:;L.O.;1.1;AACS
B:; Reflective;Thinking


9) One;problem;with;maximization;of;shareholder;wealth;as;a;goal;is;that;it;ignores;risk;taken;by;the;fi
rm's;financial;decisions.
Answer:;FALSE;Dif
f:;1 Page;Ref:;4
Keywords:;Goal;of;the;Firm;L
earning;Obj.:;L.O.;1.1;AACS
B:; Reflective;Thinking


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