FINANCIAL MANAGEMENT THEORY AND
PRACTICE 16TH EDITION BY BRIGHAM 2026
MOCK EXAM PRACTICE SET AND ANSWERS
A+
◉ 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
◉ the principle of finance that "money has time value" implies
money in hand today is worth less than the promise of receiving the
same amount in the future because a sum of money today could be
invested and grow over time. Answer: False
◉ the principle of finance that "lower returns are expected for
taking on less risk" implies that rational investors would choose a
risky investment only if they feel the expected return is high enough
to justify the greater risk Answer: True
◉ the principle of finance that "financial markets are efficient in
pricing securities" implies that the prices of securities reflect some
information available to the public and that when new information
becomes available, prices change over time to reflect that
information. Answer: False, price reflects all information
◉ the principle of finance that "management objectives may differ
from owner objectives" implies that owner returnsmay suffer as a
result of manager objectives. Answer: true
◉ The principle of finance that "management objectives may differ
from owner objectives" can be resolved by increasing manager
PRACTICE 16TH EDITION BY BRIGHAM 2026
MOCK EXAM PRACTICE SET AND ANSWERS
A+
◉ 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
◉ the principle of finance that "money has time value" implies
money in hand today is worth less than the promise of receiving the
same amount in the future because a sum of money today could be
invested and grow over time. Answer: False
◉ the principle of finance that "lower returns are expected for
taking on less risk" implies that rational investors would choose a
risky investment only if they feel the expected return is high enough
to justify the greater risk Answer: True
◉ the principle of finance that "financial markets are efficient in
pricing securities" implies that the prices of securities reflect some
information available to the public and that when new information
becomes available, prices change over time to reflect that
information. Answer: False, price reflects all information
◉ the principle of finance that "management objectives may differ
from owner objectives" implies that owner returnsmay suffer as a
result of manager objectives. Answer: true
◉ The principle of finance that "management objectives may differ
from owner objectives" can be resolved by increasing manager
