Test bank for Finance Applications and Theory 6th Edition by Marcia Cornett and Adair All Chapters 1-20

Test bank
Finance Applications and Theory 6th Edition
by Marcia Cornett and Adair All Chapters 1-20

,FinanceeApplicationseandeTheorye6eeCornett
Chapter 1-20 Answers are at the end of Each chapter
e e e e e e e e e




Chapter 1e




Student name:
e


Whichestatements(s)eis/areetrueeforesuccessfuleapplicationeofefinancialetheories?
Theeeconomyewillebeemoreeproductive.
Individual’sewealthewillegrow.
Theeeconomyewillebeemoreeproductiveeandeindividual'sewealthewillegrow.
Noneeofetheseechoiceseareecorrect.



Noteallecasheaecompanyegeneratesewillebeereturnedetoetheeinvestors.eWhicheofetheefollowingewille
NOTereduceetheeamounteofecapitalereturnedetoetheeinvestors?
retainedeearnings
taxes
dividends



Thisesubareaeofefinanceeinvolvesemethodseandetechniquesetoemakeeappropriateedecisionse aboute
whatekindseofesecuritiesetoeown,ewhichefirms'esecuritiesetoebuy,eandehowetoebeepaidebackeinethee
formethatetheeinvestorewishes.
realemarkets
investments
financialemanagement



Thisesubareaeofefinanceelookseatefirmedecisionseineacquiringeandeutilizingecashereceivedefromeinves
torseorefromeretainedeearnings.
investments
financialemanagement
financialeinstitutionseandemarkets

,Financialemanagementeinvolvesedecisionseaboutewhicheofetheefollowing?
Whicheprojectsetoefund
Howetoeminimizeetaxation
Whatetypeeofecapitaleshouldebeeraised
Alleofetheseechoiceseareecorrect.



Thisesubareaeofefinanceehelpsefacilitateetheecapitaleflowsebetweeneinvestorseandecompanies.
investments
financialemanagement
treasuryemanagement
financialeinstitutionseandemarkets



Thisesubareaeofefinanceeiseimportanteforeadaptingetoetheeglobaleeconomy.
investments
financialemanagement
internationalefinance
financialeinstitutionseandemarkets



Aepotentialefutureenegativeeimpactetoevalueeand/orecasheflowseiseoftenediscussedeinetermseofepro
babilityeofelosseandetheeexpectedemagnitudeeofetheeloss.eThiseisecalled
options.
standardedeviation.
coefficienteofevariation.
risk.



Thiseiseaetermetoedescribeenon-
physicaleassetselikeestockseandebondsethategetetheirevalueefromefutureecasheflows.
investment
financialeasset
realeasset
financialemarkets

, Whicheofetheefollowingeisedefinedeaseaegroupeofesecuritiesethateexhibitesimilarecharacteristics,ebeh
aveesimilarlyeinetheemarketplace,eandeareesubjectetoetheesameelawseanderegulations?
investments
asseteclasses
marketeinstruments
financialemarkets



Theemostecommonlyeacceptedegroupseofeasseteclasseseincludeealleofetheefollowingeexcept
stocks.
bonds.
machineryeandeequipment.
realeestate.



Thee
isetheeinteresterateeatewhichebankseandeotheredepositoryeinstitutionselenderes
erveebalancesetoeoneeanothereovernight;ethiserateeheavilyeinfluenceseothereshort-termerates.
averageetaxerate
exchangeerate
federalefundserate
noneeofetheseechoiceseareecorrect.



Whicheofetheefollowingestatementseregardingequantitativeeeasinge(QE)eareetrue?
QEeiseaemonetaryepolicyedesignedetoeincreaseetheemoneyesupplyeinetheeeconomyethro
ughebuyingesecuritieseinetheemarketeandeloweringeshort-termeinteresterates.
TheefirsteroundeofeQEeinvolvedetheeFedetoepurchaseepotentiallyetoxicemortgage-
backedesecuritiesefromebanks.
Duringeearlye2020edueetoetheeCOVID-
19epandemic,etheeFededroppedetheefederalefundserateetoe1.25%eandetheneagaine0.25eaef
ewemonthselater.
Alleofetheseechoiceseareecorrect.



Whicheofetheefollowingeisetheefirm'sehighest-levelefinancialemanager?
chiefeexecutiveeofficer
chiefefinancialeofficer
boardeofedirectors
corporateegovernance