Test Bank for Foundations of Financial Management 18th Edition
TEST BANK
FOUNDATIONS OF FINANCIAL MANAGEMENT 18TH EDITION (MCGRAW-HILL,
2022) BY STANLEY BLOCK, GEOFFREY HIRT AND BARTLEY DANIELSEN, ISBN
NO; 9781266040917, ALL 21 CHAPTERS COVERED
Foundations of Financial Management, 18th Edition (Block)
, Test Bank for Foundations of Financial Management 18th Edition
Chapter 1 The Goals and Activities of Financial Management
1) As finance emerged as a new field, much emphasis was placed on mergers and
acquisitions.
Answer: TRUE Difficulty: 1 Easy
Topic: Introduction to corporate finance
Learning Objective: 01-01 The field of finance integrates concepts from economics,
accounting, and a number of other areas.
Bloom's: Remember AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
2) Inflation is assumed to be a temporary problem that does not affect financial
decisions.
Answer: FALSE Difficulty: 1 Easy
Topic: Financial management decisions
Learning Objective: 01-01 The field of finance integrates concepts from economics,
accounting, and a number of other areas.
Bloom's: Remember AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
3) Financial capital is composed of long-term plant and equipment, as well as other
tangible investments.
Answer: FALSE Difficulty: 1 Easy
Topic: Introduction to corporate finance
Learning Objective: 01-01 The field of finance integrates concepts from economics,
accounting, and a number of other areas.
Bloom's: Remember AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
4) Real capital is composed of long-term plant and equipment.
Answer: TRUE Difficulty: 1 Easy
Topic: Introduction to corporate finance
Learning Objective: 01-01 The field of finance integrates concepts from economics,
accounting, and a number of other areas.
Bloom's: Remember
, Test Bank for Foundations of Financial Management 18th Edition
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
5) During the 1930s, financial practice revolved around such topics as the preservation of
capital, maintenance of liquidity, the reorganization of financially troubled corporations,
and bankruptcy.
Answer: TRUE Difficulty: 1 Easy
Topic: Introduction to corporate finance
Learning Objective: 01-01 The field of finance integrates concepts from economics,
accounting, and a number of other areas.
Bloom's: Remember AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
6) In the mid 1950s, finance began to change to a more analytical, decision-oriented
approach.
Answer: TRUE Difficulty: 1 Easy
Topic: Introduction to corporate finance
Learning Objective: 01-01 The field of finance integrates concepts from economics,
accounting, and a number of other areas.
Bloom's: Remember AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
7) Recently, the emphasis of financial management has been on the relationship between
risk and return.
Answer: TRUE Difficulty: 1 Easy
Topic: Introduction to corporate finance
Learning Objective: 01-01 The field of finance integrates concepts from economics, accounting,
and a number of other areas.; 01-03 The relationship of risk to return is a central focus of
finance. Bloom's: Understand
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
8) The first Nobel Prizes given to finance professors were for their contributions to
capital structure theory and portfolio theories of risk and return.
Answer: TRUE Difficulty: 1 Easy
Topic: Introduction to corporate finance
Learning Objective: 01-01 The field of finance integrates concepts from economics,
accounting, and a number of other areas.
Bloom's: Remember
, Test Bank for Foundations of Financial Management 18th Edition
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
9) How investors handle risk is an important topic that usually only economists observe.
Answer: FALSE
Explanation: Behavioral finance is something that the finance industry puts heavy emphasis
on. Difficulty: 1 Easy
Topic: Introduction to corporate finance
Learning Objective: 01-01 The field of finance integrates concepts from economics,
accounting, and a number of other areas.
Bloom's: Remember AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
10) Mortgage-backed securities were devalued by accounting standards because of the high
credit ratings (AAA).
Answer: FALSE
Explanation: These securities were devalued because borrowers defaulted on their loans and
didn't have the financial means to back up their loans in other ways.
Difficulty: 1 Easy
Topic: Introduction to corporate finance
Learning Objective: 01-01 The field of finance integrates concepts from economics,
accounting, and a number of other areas.
Bloom's: Remember AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
11) "Credit default swaps" are one of several tools that Congress and the President of the
United States have jointly developed to ease the financial crisis that began in 2008.
Answer: FALSE Difficulty: 1 Easy
Topic: Introduction to corporate finance
Learning Objective: 01-01 The field of finance integrates concepts from economics,
accounting, and a number of other areas.
Bloom's: Understand AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
12) The Dodd-Frank Act was created by Congress along with its goals and regulatory
responsibility, but it is facilitated by various agencies.
Answer: TRUE Difficulty: 1 Easy
TEST BANK
FOUNDATIONS OF FINANCIAL MANAGEMENT 18TH EDITION (MCGRAW-HILL,
2022) BY STANLEY BLOCK, GEOFFREY HIRT AND BARTLEY DANIELSEN, ISBN
NO; 9781266040917, ALL 21 CHAPTERS COVERED
Foundations of Financial Management, 18th Edition (Block)
, Test Bank for Foundations of Financial Management 18th Edition
Chapter 1 The Goals and Activities of Financial Management
1) As finance emerged as a new field, much emphasis was placed on mergers and
acquisitions.
Answer: TRUE Difficulty: 1 Easy
Topic: Introduction to corporate finance
Learning Objective: 01-01 The field of finance integrates concepts from economics,
accounting, and a number of other areas.
Bloom's: Remember AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
2) Inflation is assumed to be a temporary problem that does not affect financial
decisions.
Answer: FALSE Difficulty: 1 Easy
Topic: Financial management decisions
Learning Objective: 01-01 The field of finance integrates concepts from economics,
accounting, and a number of other areas.
Bloom's: Remember AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
3) Financial capital is composed of long-term plant and equipment, as well as other
tangible investments.
Answer: FALSE Difficulty: 1 Easy
Topic: Introduction to corporate finance
Learning Objective: 01-01 The field of finance integrates concepts from economics,
accounting, and a number of other areas.
Bloom's: Remember AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
4) Real capital is composed of long-term plant and equipment.
Answer: TRUE Difficulty: 1 Easy
Topic: Introduction to corporate finance
Learning Objective: 01-01 The field of finance integrates concepts from economics,
accounting, and a number of other areas.
Bloom's: Remember
, Test Bank for Foundations of Financial Management 18th Edition
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
5) During the 1930s, financial practice revolved around such topics as the preservation of
capital, maintenance of liquidity, the reorganization of financially troubled corporations,
and bankruptcy.
Answer: TRUE Difficulty: 1 Easy
Topic: Introduction to corporate finance
Learning Objective: 01-01 The field of finance integrates concepts from economics,
accounting, and a number of other areas.
Bloom's: Remember AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
6) In the mid 1950s, finance began to change to a more analytical, decision-oriented
approach.
Answer: TRUE Difficulty: 1 Easy
Topic: Introduction to corporate finance
Learning Objective: 01-01 The field of finance integrates concepts from economics,
accounting, and a number of other areas.
Bloom's: Remember AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
7) Recently, the emphasis of financial management has been on the relationship between
risk and return.
Answer: TRUE Difficulty: 1 Easy
Topic: Introduction to corporate finance
Learning Objective: 01-01 The field of finance integrates concepts from economics, accounting,
and a number of other areas.; 01-03 The relationship of risk to return is a central focus of
finance. Bloom's: Understand
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
8) The first Nobel Prizes given to finance professors were for their contributions to
capital structure theory and portfolio theories of risk and return.
Answer: TRUE Difficulty: 1 Easy
Topic: Introduction to corporate finance
Learning Objective: 01-01 The field of finance integrates concepts from economics,
accounting, and a number of other areas.
Bloom's: Remember
, Test Bank for Foundations of Financial Management 18th Edition
AACSB: Reflective Thinking Accessibility: Keyboard Navigation
9) How investors handle risk is an important topic that usually only economists observe.
Answer: FALSE
Explanation: Behavioral finance is something that the finance industry puts heavy emphasis
on. Difficulty: 1 Easy
Topic: Introduction to corporate finance
Learning Objective: 01-01 The field of finance integrates concepts from economics,
accounting, and a number of other areas.
Bloom's: Remember AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
10) Mortgage-backed securities were devalued by accounting standards because of the high
credit ratings (AAA).
Answer: FALSE
Explanation: These securities were devalued because borrowers defaulted on their loans and
didn't have the financial means to back up their loans in other ways.
Difficulty: 1 Easy
Topic: Introduction to corporate finance
Learning Objective: 01-01 The field of finance integrates concepts from economics,
accounting, and a number of other areas.
Bloom's: Remember AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
11) "Credit default swaps" are one of several tools that Congress and the President of the
United States have jointly developed to ease the financial crisis that began in 2008.
Answer: FALSE Difficulty: 1 Easy
Topic: Introduction to corporate finance
Learning Objective: 01-01 The field of finance integrates concepts from economics,
accounting, and a number of other areas.
Bloom's: Understand AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
12) The Dodd-Frank Act was created by Congress along with its goals and regulatory
responsibility, but it is facilitated by various agencies.
Answer: TRUE Difficulty: 1 Easy
