FINANCIAL MANAGEMENT THEORY AND
PRACTICE 16TH EDITION BY BRIGHAM 2026
FINAL EXAM PREPARATION KEY CONCEPTS A+
◉ Financial markets provide the mechanism for allocating financial
resources or funds from savers to borrowers. Answer: True
◉ The goal of the financial manager in a profit-seeking organization
should be to maximize the owners' wealth. Answer: True
◉ The secondary securities markets are involved in creating and
issuing new securities, mortgages, and other claims to wealth.
Answer: False
◉ Money markets are the markets where generally short-term
assets are traded. Answer: True, money markets are one year or less
◉ One of the most significant functions of the monetary system
within the financial system is the creation of money, which serves as
a medium of exchange Answer: True
, ◉ Personal finance is the study of how growth-driven performance-
focused, early-stage firms raise financial capital and manage
operations and assets Answer: False (entrepreneurial finance)
◉ Personal finance is the study of how individuals prepare for
financial emergencies, protect against premature death and
property losses, and accumulate wealth. Answer: True
◉ An effective financial system is a complex mix of government and
policy makers, a monetary system, financial institutions, and
financial markets that interact to expedite the flow of financial
capital from savings into investment. Answer: True
◉ Capital markets are markets where equity securities and debt
securities with maturities of greater than one year are traded.
Answer: True
◉ money markets are markets where equity securities and debt
securities with maturities of greater than one year are traded
Answer: False
◉ The six principles of finance include (1) money has a time value,
(2) higher returns are expected for taking on more risk, (3)
diversification of investments can reduce risk, (4) financial markets
are efficient in pricing securities, (5) manager and stockholder
objectives may differ, and (6) reputation matters) Answer: true
PRACTICE 16TH EDITION BY BRIGHAM 2026
FINAL EXAM PREPARATION KEY CONCEPTS A+
◉ Financial markets provide the mechanism for allocating financial
resources or funds from savers to borrowers. Answer: True
◉ The goal of the financial manager in a profit-seeking organization
should be to maximize the owners' wealth. Answer: True
◉ The secondary securities markets are involved in creating and
issuing new securities, mortgages, and other claims to wealth.
Answer: False
◉ Money markets are the markets where generally short-term
assets are traded. Answer: True, money markets are one year or less
◉ One of the most significant functions of the monetary system
within the financial system is the creation of money, which serves as
a medium of exchange Answer: True
, ◉ Personal finance is the study of how growth-driven performance-
focused, early-stage firms raise financial capital and manage
operations and assets Answer: False (entrepreneurial finance)
◉ Personal finance is the study of how individuals prepare for
financial emergencies, protect against premature death and
property losses, and accumulate wealth. Answer: True
◉ An effective financial system is a complex mix of government and
policy makers, a monetary system, financial institutions, and
financial markets that interact to expedite the flow of financial
capital from savings into investment. Answer: True
◉ Capital markets are markets where equity securities and debt
securities with maturities of greater than one year are traded.
Answer: True
◉ money markets are markets where equity securities and debt
securities with maturities of greater than one year are traded
Answer: False
◉ The six principles of finance include (1) money has a time value,
(2) higher returns are expected for taking on more risk, (3)
diversification of investments can reduce risk, (4) financial markets
are efficient in pricing securities, (5) manager and stockholder
objectives may differ, and (6) reputation matters) Answer: true
