Test Bank for Foundations of Finance 10e 10th Edition by Arthur J. Keown, John D. Martin; J. William Petty ISBN-13: 0619 Full chapters

Test Bank for Foundations of Finance, 10e(
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Chapterb1b AnbIntroductionbtobthebFoundationsbofbFinancialbManagement


LearningbObjectiveb1.1




1) Financialbmanagementbdealsbwithbthebmaintenancebandbcreationbofbeconomicbvalueborb
wealth.bAnswer:bTRUE

Diff:b1b PagebRef:b3

Keywords:bFinancialbManagementbLearningbObj.:bL.O.b1.1b

AACSB:bReflectivebThinking




2) Eachbfinancialbdecisionbmadebbybabcorporatebmanagerbcanbbebevaluatedbbybitsbdirectbi
mpactbonbthebcorporation'sbstockbprice.

Answer:bFALSEbDiff:b1 PagebRef:b4

Keywords:bGoalbofbthebFirmbLearningbObj.:bL.O.b1.1bAACSB:bReflectivebThinking




3) Thebfundamentalbgoalbofbabbusinessbisbtobmaximizebthebretainedbearningsbavailablebtobthebc
orporation'sbshareholders.

Answer:bFALSEbDiff:b1 PagebRef:b3

Keywords:bGoalbofbthebFirmbLearningbObj.:bL.O.b1.1bAACSB:bReflectivebThinking

,4) Shareholderbwealthbmaximizationbmeansbmaximizingbthebpricebofbthebexistingbcommonbs
tock.bAnswer:bTRUE




Diff:b1b PagebRef:b3

Keywords:bShareholderbWealth,bGoalbofbthebFirmbLearningbObj.:bL.O.b1.1b

AACSB:bReflectivebThinking




5) Itbisbimportantbtobevaluatebabcorporatebmanager'sbfinancialbdecisionbbybmeasuringbthebe
ffectbthebdecision

shouldbhavebonbthebcorporation'sbstockbpricebifbeverythingbelsebwerebheldbconstant.bAnswer:bT
RUE

Diff:b2b PagebRef:b4

Keywords:bGoalbofbthebFirm,bMaximizebShareholderbWealthbLearningbObj.:bL.O.b1.1b

AACSB:bReflectivebThinking




6) Corporatebmanagersbshouldbacceptbinvestmentbprojectsbthatbmaximizebprofitsbinbthebshortbr
unbbecausebofbthebtimebvaluebofbmoney.

Answer:bFALSEbDiff:b2 PagebRef:b4

Keywords:bGoalbofbthebFirm,bProfits,bTimebValuebofbMoneybLearningbObj.:bL.O.b1.1b

AACSB:bReflectivebThinking

, 7) Thebgoalbofbthebfirm'sbfinancialbmanagersbshouldbbebthebmaximizationbofbthebtotalbvaluebofbt
hebfirm'sbstock.

Answer:bTRUEbDiff:b1 PagebRef:b3

Keywords:bGoalbofbthebFirmbLearningbObj.:bL.O.b1.1bAACSB:bReflectivebThinking




8) Thebpaymentbofbabdividendbtobcurrentbshareholdersbwillbhavebnobimpactbonbabcorporation'sbs
harebpricebbecausebthebcashbpaidbisbnotbavailablebtobfuturebpotentialbshareholdersbwhobmaybwantbtob
buybthebcorporation'sbstock.




Answer:bFALSEbDiff:b1 PagebRef:b4

Keywords:bGoalbofbthebFirmbLearningbObj.:bL.O.b1.1bAACSB:bReflectivebThinking




9) Onebproblembwithbmaximizationbofbshareholderbwealthbasbabgoalbisbthatbitbignoresbriskbt
akenbbybthebfirm'sbfinancialbdecisions.

Answer:bFALSEbDiff:b1 PagebRef:b4

Keywords:bGoalbofbthebFirmbLearningbObj.:bL.O.b1.1bAACSB:bReflectivebThinking




10) Thebgoalbofbprofitbmaximizationbignoresbthebriskbofbfinancialbdecisions.bAnswer:bFALSE

Diff:b1bPagebRef:b4bKeywords:bGoalbofbthebFirmbLearningbObj.:bL.O.b1.1bAACSB:bReflectivebT
hinking