Foundations ndof ndFinancial ndManagement, nd17e nd(Block)
Chapter nd1 The ndGoals ndand ndActivities ndof ndFinancial ndManagement
1) As ndfinance ndemerged ndas nda ndnew ndfield, ndmuch ndemphasis ndwas ndplaced ndon ndmergers ndand
ndacquisitions.
Answer: n d TRUE
ndDifficulty: nd1 ndEasy
Topic: n d n d Introduction ndto ndcorporate ndfinance
Learning ndObjective: 01-01 ndThe ndfield ndof ndfinance ndintegrates ndconcepts ndfrom ndeconomics,
ndaccounting, ndand nda ndnumber ndof ndother ndareas.
Bloom's: Remember
n d AACSB: ndReflective ndThinking
Accessibility: Keyboard ndNavigation
2) Inflation ndis ndassumed ndto ndbe nda ndtemporary ndproblem ndthat nddoes ndnot ndaffect ndfinancial nddecisions.
Answer: n d FALSE
ndDifficulty: nd1 ndEasy
Topic: Financial ndmanagement nddecisions
Learning ndObjective: 01-01 ndThe ndfield ndof ndfinance ndintegrates ndconcepts ndfrom ndeconomics,
ndaccounting, ndand nda ndnumber ndof ndother ndareas.
Bloom's: Remember
n d AACSB: ndReflective ndThinking
Accessibility: Keyboard ndNavigation
3) Financial ndcapital ndis ndcomposed ndof ndlong-term ndplant ndand ndequipment, ndas ndwell ndas ndother
ndtangible ndinvestments.
Answer: n d FALSE
ndDifficulty: nd1 ndEasy
Topic: n d n d Introduction ndto ndcorporate ndfinance
Learning ndObjective: 01-01 ndThe ndfield ndof ndfinance ndintegrates ndconcepts ndfrom ndeconomics,
ndaccounting, ndand nda ndnumber ndof ndother ndareas.
Bloom's: Remember
n d AACSB: ndReflective ndThinking
Accessibility: Keyboard ndNavigation
4) Real ndcapital ndis ndcomposed ndof ndlong-term ndplant ndand ndequipment.
Answer: n d TRUE
ndDifficulty: nd1 ndEasy
Topic: n d n d Introduction ndto ndcorporate ndfinance
Learning ndObjective: 01-01 ndThe ndfield ndof ndfinance ndintegrates ndconcepts ndfrom ndeconomics,
ndaccounting, ndand nda ndnumber ndof ndother ndareas.
Bloom's: Remember
1
Copyright nd© nd2019 ndMcGraw-Hill ndEducation. ndAll ndrights ndreserved.
No ndreproduction ndor nddistribution ndwithout ndthe ndprior ndwritten ndconsent ndof ndMcGraw-Hill
Education.
,AACSB: n d Reflective ndThinking
ndAccessibility: nd n d Keyboard
ndNavigation
5) During ndthe nd1930s, ndfinancial ndpractice ndrevolved ndaround ndsuch ndtopics ndas ndthe ndpreservation ndof
ndcapital, ndmaintenance ndof ndliquidity, ndthe ndreorganization ndof ndfinancially ndtroubled ndcorporations,
ndand ndbankruptcy.
Answer: n d TRUE
ndDifficulty: nd1 ndEasy
Topic: n d n d Introduction ndto ndcorporate ndfinance
Learning ndObjective: 01-01 ndThe ndfield ndof ndfinance ndintegrates ndconcepts ndfrom ndeconomics,
ndaccounting, ndand nda ndnumber ndof ndother ndareas.
Bloom's: Remember
n d AACSB: ndReflective ndThinking
Accessibility: Keyboard ndNavigation
6) In ndthe ndmid nd1950s, ndfinance ndbegan ndto ndchange ndto nda ndmore ndanalytical, nddecision-oriented
ndapproach.
Answer: n d TRUE
ndDifficulty: nd1 ndEasy
Topic: n d n d Introduction ndto ndcorporate ndfinance
Learning ndObjective: 01-01 ndThe ndfield ndof ndfinance ndintegrates ndconcepts ndfrom ndeconomics,
ndaccounting, ndand nda ndnumber ndof ndother ndareas.
Bloom's: Remember
n d AACSB: ndReflective ndThinking
Accessibility: Keyboard ndNavigation
7) Recently, ndthe ndemphasis ndof ndfinancial ndmanagement ndhas ndbeen ndon ndthe ndrelationship ndbetween
ndrisk ndand ndreturn.
Answer: n d TRUE
ndDifficulty: nd1 ndEasy
Topic: n d n d Introduction ndto ndcorporate ndfinance
Learning ndObjective: n d 01-01 ndThe ndfield ndof ndfinance ndintegrates ndconcepts ndfrom ndeconomics,
ndaccounting, ndand nda ndnumber ndof ndother ndareas.; nd01-03 ndThe ndrelationship ndof ndrisk ndto ndreturn ndis nda
ndcentral ndfocus ndof ndfinance. ndBloom's: n d Understand
AACSB: n d Analytical ndThinking
ndAccessibility: nd n d Keyboard
ndNavigation
8) The ndfirst ndNobel ndPrizes ndgiven ndto ndfinance ndprofessors ndwere ndfor ndtheir ndcontributions ndto
ndcapital ndstructure ndtheory ndand ndportfolio ndtheories ndof ndrisk ndand ndreturn.
Answer: n d TRUE
ndDifficulty: nd1 ndEasy
2
Copyright nd© nd2019 ndMcGraw-Hill ndEducation. ndAll ndrights ndreserved.
No ndreproduction ndor nddistribution ndwithout ndthe ndprior ndwritten ndconsent ndof ndMcGraw-Hill
Education.
,Topic: n d n d Introduction ndto ndcorporate ndfinance
Learning ndObjective: 01-01 ndThe ndfield ndof ndfinance ndintegrates ndconcepts ndfrom ndeconomics,
ndaccounting, ndand nda ndnumber ndof ndother ndareas.
Bloom's: Remember
3
Copyright nd© nd2019 ndMcGraw-Hill ndEducation. ndAll ndrights ndreserved.
No ndreproduction ndor nddistribution ndwithout ndthe ndprior ndwritten ndconsent ndof ndMcGraw-Hill
Education.
, AACSB: Reflective ndThinking
ndAccessibility: Keyboard
ndNavigation
9) How ndinvestors ndhandle ndrisk ndis ndan ndimportant ndtopic ndthat ndusually ndonly ndeconomists ndobserve.
Answer: n d n d FALSE
Explanation: Behavioral ndfinance ndis ndsomething ndthat ndthe ndfinance ndindustry ndputs ndheavy
ndemphasis ndon. ndDifficulty: nd1 ndEasy
Topic: n d n d Introduction ndto ndcorporate ndfinance
Learning ndObjective: 01-01 ndThe ndfield ndof ndfinance ndintegrates ndconcepts ndfrom ndeconomics,
ndaccounting, ndand nda ndnumber ndof ndother ndareas.
Bloom's: Remember
n d AACSB: ndReflective ndThinking
Accessibility: Keyboard ndNavigation
10) Mortgage-backed ndsecurities ndwere nddevalued ndby ndaccounting ndstandards ndbecause ndof ndthe ndhigh
ndcredit ndratings nd(AAA).
Answer: n d n d FALSE
Explanation: n d These ndsecurities ndwere nddevalued ndbecause ndborrowers nddefaulted ndon ndtheir ndloans
ndand nddidn't ndhave ndthe ndfinancial ndmeans ndto ndback ndup ndtheir ndloans ndin ndother ndways.
Difficulty: nd1 ndEasy
Topic: n d n d Introduction ndto ndcorporate ndfinance
Learning ndObjective: 01-01 ndThe ndfield ndof ndfinance ndintegrates ndconcepts ndfrom ndeconomics,
ndaccounting, ndand nda ndnumber ndof ndother ndareas.
Bloom's: Remember
n d AACSB: ndReflective ndThinking
Accessibility: Keyboard ndNavigation
11) "Credit nddefault ndswaps" ndare ndone ndof ndseveral ndtools ndthat ndCongress ndand ndthe ndPresident ndof
ndthe ndUnited ndStates ndhave ndjointly nddeveloped ndto ndease ndthe ndfinancial ndcrisis ndthat ndbegan ndin
nd2008.
Answer: n d FALSE
ndDifficulty: nd1 ndEasy
Topic: n d n d Introduction ndto ndcorporate ndfinance
Learning ndObjective: 01-01 ndThe ndfield ndof ndfinance ndintegrates ndconcepts ndfrom ndeconomics,
ndaccounting, ndand nda ndnumber ndof ndother ndareas.
Bloom's: Understand
ndAACSB: ndAnalytical ndThinking
Accessibility: Keyboard ndNavigation
4
Copyright nd© nd2019 ndMcGraw-Hill ndEducation. ndAll ndrights ndreserved.
No ndreproduction ndor nddistribution ndwithout ndthe ndprior ndwritten ndconsent ndof ndMcGraw-Hill
Education.
Chapter nd1 The ndGoals ndand ndActivities ndof ndFinancial ndManagement
1) As ndfinance ndemerged ndas nda ndnew ndfield, ndmuch ndemphasis ndwas ndplaced ndon ndmergers ndand
ndacquisitions.
Answer: n d TRUE
ndDifficulty: nd1 ndEasy
Topic: n d n d Introduction ndto ndcorporate ndfinance
Learning ndObjective: 01-01 ndThe ndfield ndof ndfinance ndintegrates ndconcepts ndfrom ndeconomics,
ndaccounting, ndand nda ndnumber ndof ndother ndareas.
Bloom's: Remember
n d AACSB: ndReflective ndThinking
Accessibility: Keyboard ndNavigation
2) Inflation ndis ndassumed ndto ndbe nda ndtemporary ndproblem ndthat nddoes ndnot ndaffect ndfinancial nddecisions.
Answer: n d FALSE
ndDifficulty: nd1 ndEasy
Topic: Financial ndmanagement nddecisions
Learning ndObjective: 01-01 ndThe ndfield ndof ndfinance ndintegrates ndconcepts ndfrom ndeconomics,
ndaccounting, ndand nda ndnumber ndof ndother ndareas.
Bloom's: Remember
n d AACSB: ndReflective ndThinking
Accessibility: Keyboard ndNavigation
3) Financial ndcapital ndis ndcomposed ndof ndlong-term ndplant ndand ndequipment, ndas ndwell ndas ndother
ndtangible ndinvestments.
Answer: n d FALSE
ndDifficulty: nd1 ndEasy
Topic: n d n d Introduction ndto ndcorporate ndfinance
Learning ndObjective: 01-01 ndThe ndfield ndof ndfinance ndintegrates ndconcepts ndfrom ndeconomics,
ndaccounting, ndand nda ndnumber ndof ndother ndareas.
Bloom's: Remember
n d AACSB: ndReflective ndThinking
Accessibility: Keyboard ndNavigation
4) Real ndcapital ndis ndcomposed ndof ndlong-term ndplant ndand ndequipment.
Answer: n d TRUE
ndDifficulty: nd1 ndEasy
Topic: n d n d Introduction ndto ndcorporate ndfinance
Learning ndObjective: 01-01 ndThe ndfield ndof ndfinance ndintegrates ndconcepts ndfrom ndeconomics,
ndaccounting, ndand nda ndnumber ndof ndother ndareas.
Bloom's: Remember
1
Copyright nd© nd2019 ndMcGraw-Hill ndEducation. ndAll ndrights ndreserved.
No ndreproduction ndor nddistribution ndwithout ndthe ndprior ndwritten ndconsent ndof ndMcGraw-Hill
Education.
,AACSB: n d Reflective ndThinking
ndAccessibility: nd n d Keyboard
ndNavigation
5) During ndthe nd1930s, ndfinancial ndpractice ndrevolved ndaround ndsuch ndtopics ndas ndthe ndpreservation ndof
ndcapital, ndmaintenance ndof ndliquidity, ndthe ndreorganization ndof ndfinancially ndtroubled ndcorporations,
ndand ndbankruptcy.
Answer: n d TRUE
ndDifficulty: nd1 ndEasy
Topic: n d n d Introduction ndto ndcorporate ndfinance
Learning ndObjective: 01-01 ndThe ndfield ndof ndfinance ndintegrates ndconcepts ndfrom ndeconomics,
ndaccounting, ndand nda ndnumber ndof ndother ndareas.
Bloom's: Remember
n d AACSB: ndReflective ndThinking
Accessibility: Keyboard ndNavigation
6) In ndthe ndmid nd1950s, ndfinance ndbegan ndto ndchange ndto nda ndmore ndanalytical, nddecision-oriented
ndapproach.
Answer: n d TRUE
ndDifficulty: nd1 ndEasy
Topic: n d n d Introduction ndto ndcorporate ndfinance
Learning ndObjective: 01-01 ndThe ndfield ndof ndfinance ndintegrates ndconcepts ndfrom ndeconomics,
ndaccounting, ndand nda ndnumber ndof ndother ndareas.
Bloom's: Remember
n d AACSB: ndReflective ndThinking
Accessibility: Keyboard ndNavigation
7) Recently, ndthe ndemphasis ndof ndfinancial ndmanagement ndhas ndbeen ndon ndthe ndrelationship ndbetween
ndrisk ndand ndreturn.
Answer: n d TRUE
ndDifficulty: nd1 ndEasy
Topic: n d n d Introduction ndto ndcorporate ndfinance
Learning ndObjective: n d 01-01 ndThe ndfield ndof ndfinance ndintegrates ndconcepts ndfrom ndeconomics,
ndaccounting, ndand nda ndnumber ndof ndother ndareas.; nd01-03 ndThe ndrelationship ndof ndrisk ndto ndreturn ndis nda
ndcentral ndfocus ndof ndfinance. ndBloom's: n d Understand
AACSB: n d Analytical ndThinking
ndAccessibility: nd n d Keyboard
ndNavigation
8) The ndfirst ndNobel ndPrizes ndgiven ndto ndfinance ndprofessors ndwere ndfor ndtheir ndcontributions ndto
ndcapital ndstructure ndtheory ndand ndportfolio ndtheories ndof ndrisk ndand ndreturn.
Answer: n d TRUE
ndDifficulty: nd1 ndEasy
2
Copyright nd© nd2019 ndMcGraw-Hill ndEducation. ndAll ndrights ndreserved.
No ndreproduction ndor nddistribution ndwithout ndthe ndprior ndwritten ndconsent ndof ndMcGraw-Hill
Education.
,Topic: n d n d Introduction ndto ndcorporate ndfinance
Learning ndObjective: 01-01 ndThe ndfield ndof ndfinance ndintegrates ndconcepts ndfrom ndeconomics,
ndaccounting, ndand nda ndnumber ndof ndother ndareas.
Bloom's: Remember
3
Copyright nd© nd2019 ndMcGraw-Hill ndEducation. ndAll ndrights ndreserved.
No ndreproduction ndor nddistribution ndwithout ndthe ndprior ndwritten ndconsent ndof ndMcGraw-Hill
Education.
, AACSB: Reflective ndThinking
ndAccessibility: Keyboard
ndNavigation
9) How ndinvestors ndhandle ndrisk ndis ndan ndimportant ndtopic ndthat ndusually ndonly ndeconomists ndobserve.
Answer: n d n d FALSE
Explanation: Behavioral ndfinance ndis ndsomething ndthat ndthe ndfinance ndindustry ndputs ndheavy
ndemphasis ndon. ndDifficulty: nd1 ndEasy
Topic: n d n d Introduction ndto ndcorporate ndfinance
Learning ndObjective: 01-01 ndThe ndfield ndof ndfinance ndintegrates ndconcepts ndfrom ndeconomics,
ndaccounting, ndand nda ndnumber ndof ndother ndareas.
Bloom's: Remember
n d AACSB: ndReflective ndThinking
Accessibility: Keyboard ndNavigation
10) Mortgage-backed ndsecurities ndwere nddevalued ndby ndaccounting ndstandards ndbecause ndof ndthe ndhigh
ndcredit ndratings nd(AAA).
Answer: n d n d FALSE
Explanation: n d These ndsecurities ndwere nddevalued ndbecause ndborrowers nddefaulted ndon ndtheir ndloans
ndand nddidn't ndhave ndthe ndfinancial ndmeans ndto ndback ndup ndtheir ndloans ndin ndother ndways.
Difficulty: nd1 ndEasy
Topic: n d n d Introduction ndto ndcorporate ndfinance
Learning ndObjective: 01-01 ndThe ndfield ndof ndfinance ndintegrates ndconcepts ndfrom ndeconomics,
ndaccounting, ndand nda ndnumber ndof ndother ndareas.
Bloom's: Remember
n d AACSB: ndReflective ndThinking
Accessibility: Keyboard ndNavigation
11) "Credit nddefault ndswaps" ndare ndone ndof ndseveral ndtools ndthat ndCongress ndand ndthe ndPresident ndof
ndthe ndUnited ndStates ndhave ndjointly nddeveloped ndto ndease ndthe ndfinancial ndcrisis ndthat ndbegan ndin
nd2008.
Answer: n d FALSE
ndDifficulty: nd1 ndEasy
Topic: n d n d Introduction ndto ndcorporate ndfinance
Learning ndObjective: 01-01 ndThe ndfield ndof ndfinance ndintegrates ndconcepts ndfrom ndeconomics,
ndaccounting, ndand nda ndnumber ndof ndother ndareas.
Bloom's: Understand
ndAACSB: ndAnalytical ndThinking
Accessibility: Keyboard ndNavigation
4
Copyright nd© nd2019 ndMcGraw-Hill ndEducation. ndAll ndrights ndreserved.
No ndreproduction ndor nddistribution ndwithout ndthe ndprior ndwritten ndconsent ndof ndMcGraw-Hill
Education.
