Test Bank for Foundations of Finance 10th Edition by Arthur J. Keown.

Test Bank for Foundations of Finance, 10e(
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Keown/Martin/Petty) Latest & Updated 20
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, Foundations of Finance, 10e (Keown/Martin/Petty)
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Chapterh1h AnhIntroductionhtohthehFoundationshofhFinancialhManagement


LearninghObjectiveh1.1




1) Financialhmanagementhdealshwithhthehmaintenancehandhcreationhofheconomichvaluehorh
wealth.hAnswer:hTRUE

Diff:h1h PagehRef:h3

Keywords:hFinancialhManagementhLearninghObj.:hL.O.h1.1h

AACSB:hReflectivehThinking




2) Eachhfinancialhdecisionhmadehbyhahcorporatehmanagerhcanhbehevaluatedhbyhitshdirecthi
mpacthonhthehcorporation'shstockhprice.

Answer:hFALSEhDiff:h1 PagehRef:h4

Keywords:hGoalhofhthehFirmhLearninghObj.:hL.O.h1.1hAACSB:hReflectivehThinking




3) Thehfundamentalhgoalhofhahbusinesshishtohmaximizehthehretainedhearningshavailablehtohthehc
orporation'shshareholders.

Answer:hFALSEhDiff:h1 PagehRef:h3

Keywords:hGoalhofhthehFirmhLearninghObj.:hL.O.h1.1hAACSB:hReflectivehThinking

,4) Shareholderhwealthhmaximizationhmeanshmaximizinghthehpricehofhthehexistinghcommonhs
tock.hAnswer:hTRUE




Diff:h1h PagehRef:h3

Keywords:hShareholderhWealth,hGoalhofhthehFirmhLearninghObj.:hL.O.h1.1h

AACSB:hReflectivehThinking




5) Ithishimportanthtohevaluatehahcorporatehmanager'shfinancialhdecisionhbyhmeasuringhthehe
ffecththehdecision

shouldhhavehonhthehcorporation'shstockhpricehifheverythinghelsehwerehheldhconstant.hAnswer:hT
RUE

Diff:h2h PagehRef:h4

Keywords:hGoalhofhthehFirm,hMaximizehShareholderhWealthhLearninghObj.:hL.O.h1.1h

AACSB:hReflectivehThinking




6) Corporatehmanagershshouldhaccepthinvestmenthprojectshthathmaximizehprofitshinhthehshorthr
unhbecausehofhthehtimehvaluehofhmoney.

Answer:hFALSEhDiff:h2 PagehRef:h4

Keywords:hGoalhofhthehFirm,hProfits,hTimehValuehofhMoneyhLearninghObj.:hL.O.h1.1h

AACSB:hReflectivehThinking

, 7) Thehgoalhofhthehfirm'shfinancialhmanagershshouldhbehthehmaximizationhofhthehtotalhvaluehofht
hehfirm'shstock.

Answer:hTRUEhDiff:h1 PagehRef:h3

Keywords:hGoalhofhthehFirmhLearninghObj.:hL.O.h1.1hAACSB:hReflectivehThinking




8) Thehpaymenthofhahdividendhtohcurrenthshareholdershwillhhavehnohimpacthonhahcorporation'shs
harehpricehbecausehthehcashhpaidhishnothavailablehtohfuturehpotentialhshareholdershwhohmayhwanthtoh
buyhthehcorporation'shstock.




Answer:hFALSEhDiff:h1 PagehRef:h4

Keywords:hGoalhofhthehFirmhLearninghObj.:hL.O.h1.1hAACSB:hReflectivehThinking




9) Onehproblemhwithhmaximizationhofhshareholderhwealthhashahgoalhishthathithignoreshriskht
akenhbyhthehfirm'shfinancialhdecisions.

Answer:hFALSEhDiff:h1 PagehRef:h4

Keywords:hGoalhofhthehFirmhLearninghObj.:hL.O.h1.1hAACSB:hReflectivehThinking




10) Thehgoalhofhprofithmaximizationhignoreshthehriskhofhfinancialhdecisions.hAnswer:hFALSE

Diff:h1hPagehRef:h4hKeywords:hGoalhofhthehFirmhLearninghObj.:hL.O.h1.1hAACSB:hReflectivehT
hinking