,Finance, 5e (Cornett)
Chapter 1 Introduction to Financial Management
1) Which statements(s) is/are true for successful application of financial theories?
A) The economy will be more productive.
B) Individual's wealth will grow.
C) A and B are true.
D) None of the above.
Answer: C
Difficulty: 1 Easy
Topic: Financial theories
Bloom's: Remember; Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Learning Goal: 01-01 Define the major areas of finance as they apply to corporate financial
management.
2) Not all cash a company generates will be returned to the investors. Which of the following
will NOT reduce the amount of capital returned to the investors?
A) retained earnings
B) taxes
C) dividends
Answer: C
Difficulty: 1 Easy
Topic: Dividends and pay out policy
Bloom's: Remember; Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Learning Goal: 01-01 Define the major areas of finance as they apply to corporate financial
management.
1
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
,3) This subarea of finance involves methods and techniques to make appropriate decisions about
what kinds of securities to own, which firms' securities to buy, and how to be paid back in the
form that the investor wishes.
A) real markets
B) investments
C) financial management
Answer: B
Difficulty: 1 Easy
Topic: Introduction to corporate finance
Bloom's: Remember; Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Learning Goal: 01-01 Define the major areas of finance as they apply to corporate financial
management.
4) This subarea of finance looks at firm decisions in acquiring and utilizing cash received from
investors or from retained earnings.
A) investments
B) financial management
C) financial institutions and markets
Answer: B
Difficulty: 1 Easy
Topic: Introduction to corporate finance
Bloom's: Remember; Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Learning Goal: 01-01 Define the major areas of finance as they apply to corporate financial
management.
5) Financial management involves decisions about which of the following?
A) which projects to fund
B) how to minimize taxation
C) what type of capital should be raised
D) all of these choices are correct.
Answer: D
Difficulty: 1 Easy
Topic: Financial management decisions
Bloom's: Remember; Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Learning Goal: 01-01 Define the major areas of finance as they apply to corporate financial
management.
2
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
, 6) This subarea of finance helps facilitate the capital flows between investors and companies.
A) investments
B) financial management
C) treasury management
D) financial institutions and markets
Answer: D
Difficulty: 1 Easy
Topic: Introduction to corporate finance
Bloom's: Remember; Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Learning Goal: 01-01 Define the major areas of finance as they apply to corporate financial
management.
7) This subarea of finance is important for adapting to the global economy.
A) investments
B) financial management
C) international finance
D) financial institutions and markets
Answer: C
Difficulty: 1 Easy
Topic: Introduction to corporate finance
Bloom's: Remember; Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Learning Goal: 01-01 Define the major areas of finance as they apply to corporate financial
management.
8) A potential future negative impact to value and/or cash flows is often discussed in terms of
probability of loss and the expected magnitude of the loss. This is called
A) options.
B) standard deviation.
C) coefficient of variation.
D) risk.
Answer: D
Difficulty: 1 Easy
Topic: Risks and returns
Bloom's: Remember; Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Learning Goal: 01-01 Define the major areas of finance as they apply to corporate financial
management.
3
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Chapter 1 Introduction to Financial Management
1) Which statements(s) is/are true for successful application of financial theories?
A) The economy will be more productive.
B) Individual's wealth will grow.
C) A and B are true.
D) None of the above.
Answer: C
Difficulty: 1 Easy
Topic: Financial theories
Bloom's: Remember; Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Learning Goal: 01-01 Define the major areas of finance as they apply to corporate financial
management.
2) Not all cash a company generates will be returned to the investors. Which of the following
will NOT reduce the amount of capital returned to the investors?
A) retained earnings
B) taxes
C) dividends
Answer: C
Difficulty: 1 Easy
Topic: Dividends and pay out policy
Bloom's: Remember; Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Learning Goal: 01-01 Define the major areas of finance as they apply to corporate financial
management.
1
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
,3) This subarea of finance involves methods and techniques to make appropriate decisions about
what kinds of securities to own, which firms' securities to buy, and how to be paid back in the
form that the investor wishes.
A) real markets
B) investments
C) financial management
Answer: B
Difficulty: 1 Easy
Topic: Introduction to corporate finance
Bloom's: Remember; Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Learning Goal: 01-01 Define the major areas of finance as they apply to corporate financial
management.
4) This subarea of finance looks at firm decisions in acquiring and utilizing cash received from
investors or from retained earnings.
A) investments
B) financial management
C) financial institutions and markets
Answer: B
Difficulty: 1 Easy
Topic: Introduction to corporate finance
Bloom's: Remember; Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Learning Goal: 01-01 Define the major areas of finance as they apply to corporate financial
management.
5) Financial management involves decisions about which of the following?
A) which projects to fund
B) how to minimize taxation
C) what type of capital should be raised
D) all of these choices are correct.
Answer: D
Difficulty: 1 Easy
Topic: Financial management decisions
Bloom's: Remember; Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Learning Goal: 01-01 Define the major areas of finance as they apply to corporate financial
management.
2
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
, 6) This subarea of finance helps facilitate the capital flows between investors and companies.
A) investments
B) financial management
C) treasury management
D) financial institutions and markets
Answer: D
Difficulty: 1 Easy
Topic: Introduction to corporate finance
Bloom's: Remember; Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Learning Goal: 01-01 Define the major areas of finance as they apply to corporate financial
management.
7) This subarea of finance is important for adapting to the global economy.
A) investments
B) financial management
C) international finance
D) financial institutions and markets
Answer: C
Difficulty: 1 Easy
Topic: Introduction to corporate finance
Bloom's: Remember; Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Learning Goal: 01-01 Define the major areas of finance as they apply to corporate financial
management.
8) A potential future negative impact to value and/or cash flows is often discussed in terms of
probability of loss and the expected magnitude of the loss. This is called
A) options.
B) standard deviation.
C) coefficient of variation.
D) risk.
Answer: D
Difficulty: 1 Easy
Topic: Risks and returns
Bloom's: Remember; Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Learning Goal: 01-01 Define the major areas of finance as they apply to corporate financial
management.
3
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
