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Test Bank for Foundations of Financial Management – 18th Edition by Block & Hirt | Verified Exam Questions with Detailed Answers

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Test Bank for Foundations of Financial Management – 18th Edition by Block & Hirt | Verified Exam Questions with Detailed Answers 1 Copyright © 2019 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 2 Copyright © 2019 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Foundations q of q Financial q Management, q 17e q (Block) Chapter q 1 The q Goals q and q Activities q of q Financial q Management 1) As q finance q emerged q as q a q new q field, q much q emphasis q was q placed q on q mergers q and q acquisitions. Answer: q TRUE q Difficulty: q 1 q Easy Topic: q q Introduction q to q corporate q finance Learning q Objective: 01-01 q The q field q of q finance q integrates q concepts q from q economics, q accounting, q and q a q number q of q other q areas. Bloom's: Remember q AACSB: q Reflective q Thinking Accessibility: Keyboard q Navigation 2) Inflation q is q assumed q to q be q a q temporary q problem q that q does q not q affect q financial q decisions. Answer: q FALSE q Difficulty: q 1 q Easy Topic: Financial q management q decisions Learning q Objective: 01-01 q The q field q of q finance q integrates q concepts q from q economics, q accounting, q and q a q number q of q other q areas. Bloom's: Remember q AACSB: q Reflective q Thinking Accessibility: Keyboard q Navigation 3) Financial q capital q is q composed q of q long-term q plant q and q equipment, q as q well q as q other q tangible q investments. Answer: q FALSE q Difficulty: q 1 q Easy Topic: q q Introduction q to q corporate q finance Learning q Objective: 01-01 q The q field q of q finance q integrates q concepts q from q economics, q accounting, q and q a q number q of q other q areas. Bloom's: Remember q AACSB: q Reflective q Thinking Accessibility: Keyboard q Navigation 4) Real q capital q is q composed q of q long-term q plant q and q equipment. Answer: q TRUE q Difficulty: q 1 q Easy Topic: q q Introduction q to q corporate q finance Learning q Objective: 01-01 q The q field q of q finance q integrates q concepts q from q economics, q accounting, q and q a q number q of q other q areas. Bloom's: Remember 3 Copyright © 2019 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. AACSB: q Reflective q Thinking q Accessibility: q q Keyboard q Navigation 5) During q the q 1930s, q financial q practice q revolved q around q such q topics q as q the q preservation q of q capital, q maintenance q of q liquidity, q the q reorganization q of q financially q troubled q corporations, q and q bankruptcy. Answer: q TRUE q Difficulty: q 1 q Easy Topic: q q Introduction q to q corporate q finance Learning q Objective: 01-01 q The q field q of q finance q integrates q concepts q from q economics, q accounting, q and q a q number q of q other q areas. Bloom's: Remember q AACSB: q Reflective q Thinking Accessibility: Keyboard q Navigation 6) In q the q mid q 1950s, q finance q began q to q change q to q a q more q analytical, q decision-oriented q approach. Answer: q TRUE q Difficulty: q 1 q Easy Topic: q q Introduction q to q corporate q finance Learning q Objective: 01-01 q The q field q of q finance q integrates q concepts q from q economics, q accounting, q and q a q number q of q other q areas. Bloom's: Remember q AACSB: q Reflective q Thinking Accessibility: Keyboard q Navigation 7) Recently, q the q emphasis q of q financial q management q has q been q on q the q relationship q between q risk q and q return. Answer: q TRUE q Difficulty: q 1 q Easy Topic: q q Introduction q to q corporate q finance Learning q Objective: q 01-01 q The q field q of q finance q integrates q concepts q from q economics, q accounting, q and q a q number q of q other q areas.; q 01-03 q The q relationship q of q risk q to q return q is q a q central q focus q of q finance. q Bloom's: q Understand AACSB: q Analytical q Thinking q Accessibility: q q Keyboard q Navigation 8) The q first q Nobel q Prizes q given q to q finance q professors q were q for q their q contributions q to q capital q structure q theory q and q portfolio q theories q of q risk q and q return. Answer: q TRUE q Difficulty: q 1 q Easy Topic: q q Introduction q to q corporate q finance Learning q Objective: 01-01 q The q field q of q finance q integrates q concepts q from q economics, q accounting, q and q a q areas. other q of q number q Bloom's: Remember 4 Copyright © 2019 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 5 Copyright © 2019 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. AACSB: Reflective q Thinking q Accessibility: Keyboard q Navigation 9) How q investors q handle q risk q is q an q important q topic q that q usually q only q economists q observe. Answer: q q FALSE Explanation: Behavioral q finance q is q something q that q the q finance q industry q puts q heavy q emphasis q on. q Difficulty: q 1 q Easy Topic: q q Introduction q to q corporate q finance Learning q Objective: 01-01 q The q field q of q finance q integrates q concepts q from q economics, q accounting, q and q a q number q of q other q areas. Bloom's: Remember q AACSB: q Reflective q Thinking Accessibility: Keyboard q Navigation 10) Mortgage-backed q securities q were q devalued q by q accounting q standards q because q of q the q high q credit q ratings q (AAA). Answer: q q FALSE Explanation: q These q securities q were q devalued q because q borrowers q defaulted q on q their q loans q and q didn't q have q the q financial q means q to q back q up q their q loans q in q other q ways. Difficulty: q 1 q Easy Topic: q q Introduction q to q corporate q finance Learning q Objective: 01-01 q The q field q of q finance q integrates q concepts q from q economics, q accounting, q and q a q number q of q other q areas. Bloom's: Remember q AACSB: q Reflective q Thinking Accessibility: Keyboard q Navigation 11) "Credit q default q swaps" q are q one q of q several q tools q that q Congress q and q the q President q of q the q United q States q have q jointly q developed q to q ease q the q financial q crisis q that q began q in q 2008. Answer: q FALSE q Difficulty: q 1 q Easy Topic: q q Introduction q to q corporate q finance Learning q Objective: 01-01 q The q field q of q finance q integrates q concepts q from q economics, q accounting, q and q a q number q of q other q areas. Bloom's: Understand q AACSB: q Analytical q Thinking Accessibility: Keyboard q Navigation 6 Copyright © 2019 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 12) The q Dodd-Frank q Act q was q created q by q Congress q along q with q its q goals q and q regulatory q responsibility, q but q it q is q facilitated q by q various q agencies. Answer: q TRUE q Difficulty: q 1 q Easy Topic: q q Introduction q to q corporate q finance Learning q Objective: 01-01 q The q field q of q finance q integrates q concepts q from q economics, q accounting, q and q a q number q of q other q areas. Bloom's: Remember q AACSB: q Reflective q Thinking Accessibility: Keyboard q Navigation 13) The q Dodd-Frank q Act q contains q the q Volcker q Rule, q which q encourages q financial q institutions q to q allow q for q more q speculative q investments q for q average q investors. Answer: q FALSE q Difficulty: q 2 q Medium Topic: q q Ethics, q governance, q and q regulation Learning q Objective: 01-01 q The q field q of q finance q integrates q concepts q from q economics, q accounting, q and q a q number q of q other q areas. Bloom's: Understand q AACSB: q Analytical q Thinking Accessibility: Keyboard q Navigation 14) The q Dodd-Frank q Act's q oversight q allowing q regulation q of q banking q fees q and q available q products q has q been q considered q as q not q being q in q the q best q interests q of q a q free q market. Answer: q TRUE q Difficulty: q 2 q Medium Topic: q q Ethics, q governance, q and q regulation Learning q Objective: 01-01 q The q field q of q finance q integrates q concepts q from q economics, q accounting, q and q a q number q of q other q areas. Bloom's: Understand q AACSB: q Analytical q Thinking Accessibility: Keyboard q Navigation 15) The q Internet q impacts q e-commerce q by q creating q a q mechanism q for q improved q communications q between q a q business, q its q customers, q and q its q suppliers. Answer: q TRUE q Difficulty: q 1 q Easy Topic: q q Introduction q to q corporate q finance Learning q Objective: 01-01 q The q field q of q finance q integrates q concepts q from q economics, q accounting, q and q a q number q of q other q areas. Bloom's: Understand q AACSB: q Analytical q Thinking Accessibility: Keyboard q Navigation 7 Copyright © 2019 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 16) The q Internet q is q responsible q for q many q new q business q models. Answer: q TRUE q Difficulty: q 1 q Easy Topic: q q Introduction q to q corporate q finance Learning q Objective: 01-01 q The q field q of q finance q integrates q concepts q from q economics, q accounting, q and q a q number q of q other q areas. Bloom's: Understand q AACSB: q Analytical q Thinking Accessibility: Keyboard q Navigation 17) Businesses q will q increasingly q rely q on q B2B q Internet q applications q to q speed q up q the q cash q flows q through q their q firms. Answer: q TRUE q Difficulty: q 1 q Easy Topic: q q Introduction q to q corporate q finance Learning q Objective: 01-01 q The q field q of q finance q integrates q concepts q from q economics, q accounting, q and q a q number q of q other q areas. Bloom's: Understand q AACSB: q Analytical q Thinking Accessibility: Keyboard q Navigation 18) Sole q proprietorship q means q single-person q ownership q and q offers q the q advantages q of q simplicity q of q decision q making q and q low q organizational q and q operating q costs. Answer: q TRUE q Difficulty: q 1 q Easy Topic: Forms q of q business q organization Learning q Objective: 01-02 q A q firm q can q have q many q different q forms q of q organization. q Bloom's: Remember AACSB: Reflective q Thinking q Accessibility: Keyboard q Navigation 19) Under q the q 2017 q Tax q Cuts q and q Jobs q Act, q the q most q significant q change q is q that q the q corporate q tax q rate q goes q from q 35 q percent q to q 21 q percent, q which q puts q U.S. q Companies q on q competitive q footing q with q many q other q countries. Answer: q TRUE q Difficulty: q 1 q Easy Topic: Forms q of q business q organization Learning q Objective: 01-02 q A q firm q can q have q many q different q forms q of q organization. q Bloom's: Remember AACSB: Reflective q Thinking q Accessibility: Keyboard q Navigation 8 Copyright © 2019 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 20) Profits q of q sole q proprietorships q are q taxed q at q corporate q tax q rates. Answer: q FALSE q Difficulty: q 1 q Easy Topic: Forms q of q business q organization Learning q Objective: 01-02 q A q firm q can q have q many q different q forms q of q organization. q Bloom's: Remember AACSB: Reflective q Thinking q Accessibility: Keyboard q Navigation 21) Sole q Proprietorships, q partnerships q and q limited q liability q partnerships q are q considered q pass q through q forms q of q organizations q because q the q income q passes q through q to q the q owners q and q is q taxed q at q the q owner's q individual q tax q rate. Answer: q TRUE q Difficulty: q 1 q Easy Topic: Forms q of q business q organization Learning q Objective: 01-02 q A q firm q can q have q many q different q forms q of q organization. q Bloom's: Remember AACSB: Reflective q Thinking q Accessibility: Keyboard q Navigation 22) To q reduce q the q burden q on q small q firms, q the q government q established q a q 25 q percent q deduction q of q qualified q business q income q from q pass q through q businesses. Answer: q FALSE q Difficulty: q 1 q Easy Topic: Forms q of q business q organizati

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Written in
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Test Bank for Foundations of Financial Management –
18th Edition by Block & Hirt | Verified Exam Questions
with Detailed Answers




1
Copyright © 2019 McGraw-Hill Education. All rights reserved.
No reproduction or distribution without the prior written consent of McGraw-Hill Education.

,Foundations of Financial Management, 17e (Block)
q q q q q



Chapter 1 The Goals and Activities of Financial Management
q q q q q q q




1) As finance emerged as a new field, much emphasis was placed on mergers and acquisitions.
q q q q q q q q q q q q q q




Answer: TRUE q q



Difficulty: 1 Easy q q



Topic: Introduction to corporate finance
q q q q q



Learning Objective: 01-01 The field of finance integrates concepts from economics, accounting,
q q q q q q q q q q q



and a number of other areas.
q q q q q



Bloom's: Remember q



AACSB: Reflective Thinking q q



Accessibility: Keyboard Navigation q




2) Inflation is assumed to be a temporary problem that does not affect financial decisions.
q q q q q q q q q q q q q




Answer: FALSE q q



Difficulty: 1 Easy q q



Topic: Financial management decisions q q



Learning Objective: 01-01 The field of finance integrates concepts from economics, accounting,
q q q q q q q q q q q



and a number of other areas.
q q q q q



Bloom's: Remember q



AACSB: Reflective Thinking q q



Accessibility: Keyboard Navigation q




3) Financial capital is composed of long-term plant and equipment, as well as other tangible
q q q q q q q q q q q q q q



investments.

Answer: FALSE q q



Difficulty: 1 Easy q q



Topic: Introduction to corporate finance
q q q q q



Learning Objective: 01-01 The field of finance integrates concepts from economics, accounting,
q q q q q q q q q q q



and a number of other areas.
q q q q q



Bloom's: Remember q



AACSB: Reflective Thinking q q



Accessibility: Keyboard Navigation q




4) Real capital is composed of long-term plant and equipment.
q q q q q q q q




Answer: TRUE q q



Difficulty: 1 Easy q q



Topic: Introduction to corporate finance
q q q q q



Learning Objective: 01-01 The field of finance integrates concepts from economics, accounting,
q q q q q q q q q q q



and a number of other areas.
q q q q q



Bloom's: Remember

2
Copyright © 2019 McGraw-Hill Education. All rights reserved.
No reproduction or distribution without the prior written consent of McGraw-Hill Education.

,AACSB: Reflective Thinking q q q



Accessibility: Keyboard q q q



Navigation

5) During the 1930s, financial practice revolved around such topics as the preservation of capital,
q q q q q q q q q q q q q q



maintenance of liquidity, the reorganization of financially troubled corporations, and bankruptcy.
q q q q q q q q q q




Answer: TRUE q q



Difficulty: 1 Easy q q



Topic: Introduction to corporate finance
q q q q q



Learning Objective: 01-01 The field of finance integrates concepts from economics, accounting,
q q q q q q q q q q q



and a number of other areas.
q q q q q



Bloom's: Remember q



AACSB: Reflective Thinking q q



Accessibility: Keyboard Navigation q




6) In the mid 1950s, finance began to change to a more analytical, decision-oriented approach.
q q q q q q q q q q q q q




Answer: TRUE q q



Difficulty: 1 Easy q q



Topic: Introduction to corporate finance
q q q q q



Learning Objective: 01-01 The field of finance integrates concepts from economics, accounting,
q q q q q q q q q q q



and a number of other areas.
q q q q q



Bloom's: Remember q



AACSB: Reflective Thinking q q



Accessibility: Keyboard Navigation q




7) Recently, the emphasis of financial management has been on the relationship between risk and
q q q q q q q q q q q q q q



return.

Answer: TRUE q q



Difficulty: 1 Easy q q



Topic: Introduction to corporate finance
q q q q q



Learning Objective: 01-01 The field of finance integrates concepts from economics, accounting,
q q q q q q q q q q q



and a number of other areas.; 01-03 The relationship of risk to return is a central focus of finance.
q q q q q q q q q q q q q q q q q q q q



Bloom's: Understand q



AACSB: Analytical Thinking q q q



Accessibility: Keyboard q q q



Navigation

8) The first Nobel Prizes given to finance professors were for their contributions to capital
q q q q q q q q q q q q q q



structure theory and portfolio theories of risk and return.
q q q q q q q q




Answer: TRUE q q



Difficulty: 1 Easy q q



Topic: Introduction to corporate finance
q q q q q



Learning Objective: 01-01 The field of finance integrates concepts from economics, accounting,
q q q q q q q q q q q




3
Copyright © 2019 McGraw-Hill Education. All rights reserved.
No reproduction or distribution without the prior written consent of McGraw-Hill Education.

, and a number of other areas.
q q q q q



Bloom's: Remember




4
Copyright © 2019 McGraw-Hill Education. All rights reserved.
No reproduction or distribution without the prior written consent of McGraw-Hill Education.

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