TEST BANK FOR n n
FINANCE APPLICATIONS AND THEORY 6E
n n n n
CORNETT
n
Chapter 1- Answers are at the end of Each
n n n n n n n
20 chaptern
Chapter 1 n
Student name:
n n
1) Which nstatements(s) nis/are ntrue nfor nsuccessful napplication nof nfinancial ntheories?
A) The neconomy nwill nbe nmore nproductive.
B) Individual’s nwealth nwill ngrow.
C) The neconomy nwill nbe nmore nproductive nand nindividual's nwealth nwill ngrow.
D) None nof nthese nchoices nare ncorrect.
2) Not nall ncash na ncompany ngenerates nwill nbe nreturned nto nthe ninvestors. nWhich nof
nthe nfollowing n will nNOT nreduce nthe namount nof ncapital nreturned nto nthe
ninvestors?
A) retained nearnings
B) taxes
C) dividends
3) This nsubarea nof nfinance ninvolves nmethods nand ntechniques nto nmake nappropriate
ndecisions n about nwhat nkinds nof nsecurities nto nown, nwhich nfirms' nsecurities nto
nbuy, nand nhow n to nbe npaid nback n in nthe nform nthat nthe ninvestor nwishes.
A) real nmarkets
B) investments
C) financial nmanagement
4) This nsubarea nof nfinance nlooks nat nfirm ndecisions nin nacquiring nand nutilizing ncash
received nfrom n investors nor nfrom nretained nearnings.
n
A) investments
B) financial nmanagement
C) financial ninstitutions nand nmarkets
,5) Financial nmanagement ninvolves ndecisions nabout nwhich nof nthe nfollowing?
A) Which nprojects nto nfund
B) How nto nminimize ntaxation
C) What ntype nof ncapital nshould nbe nraised
D) All nof nthese nchoices nare ncorrect.
6) This nsubarea nof nfinance nhelps nfacilitate nthe ncapital nflows nbetween ninvestors nand
ncompanies.
A) investments
B) financial nmanagement
C) treasury nmanagement
D) financial ninstitutions nand nmarkets
7) This nsubarea nof nfinance nis nimportant nfor nadapting nto nthe nglobal neconomy.
A) investments
B) financial nmanagement
C) international nfinance
D) financial ninstitutions nand nmarkets
8) A npotential nfuture nnegative nimpact nto nvalue nand/or ncash nflows nis noften
ndiscussed nin nterms nof n probability nof nloss nand nthe nexpected nmagnitude nof nthe
nloss. nThis nis ncalled
A) options.
B) standard ndeviation.
C) coefficient nof nvariation.
D) risk.
9) This nis na nterm nto ndescribe nnon-physical nassets nlike nstocks nand nbonds nthat nget
ntheir nvalue nfrom n future ncash nflows.
A) investment
B) financial nasset
C) real nasset
D) financial nmarkets
,10) Which nof nthe nfollowing nis ndefined nas na ngroup nof nsecurities nthat nexhibit nsimilar
ncharacteristics, n behave nsimilarly nin nthe nmarketplace, nand nare nsubject nto nthe
nsame nlaws nand nregulations?
A) investments
B) asset nclasses
C) market ninstruments
D) financial nmarkets
11) The nmost ncommonly naccepted ngroups nof nasset nclasses ninclude nall nof nthe nfollowing
nexcept
A) stocks.
B) bonds.
C) machinery nand nequipment.
D) real nestate.
12) The is nthe ninterest nrate nat nwhich nbanks nand nother ndepository
ninstitutions nlend n reserve nbalances nto none nanother novernight; nthis nrate nheavily
ninfluences nother nshort-term nrates.
A) average ntax nrate
B) exchange nrate
C) federal nfunds nrate
D) none nof nthese nchoices nare ncorrect.
13) Which nof nthe nfollowing nstatements nregarding nquantitative neasing n(QE) nare ntrue?
A) QE nis na nmonetary npolicy ndesigned nto nincrease nthe nmoney nsupply nin
the neconomy n through nbuying nsecurities nin nthe nmarket nand
n
nlowering nshort-term ninterest nrates.
B) The nfirst nround nof nQE ninvolved nthe nFed nto npurchase npotentially ntoxic
nmortgage-backed n securities nfrom nbanks.
C) During nearly n2020 ndue nto nthe nCOVID-19 npandemic, nthe nFed ndropped nthe
nfederal nfunds n rate nto n1.25% nand nthen nagain n0.25 na nfew nmonths nlater.
D) All nof nthese nchoices nare ncorrect.
14) Which nof nthe nfollowing nis nthe nfirm's nhighest-level nfinancial nmanager?
A) chief nexecutive nofficer
B) chief nfinancial nofficer
C) board nof ndirectors
D) corporate ngovernance
, 15) Which nof nthe nfollowing nmanagers nwould nNOT nuse nfinance nprimarily?
A) operational nmanagers
B) marketing nmanagers
C) human nresource nmanagers
D) all nof nthese nchoices nare ncorrect.
16) Which nof nthe nfollowing npersonal ndecisions nis nimpacted nby nfinance?
A) borrowing nmoney nto npurchase ncars nor nhomes
B) making ncredit ncard npayments
C) making nretirement ndecisions
D) all nof nthese nchoices nare ncorrect.
17) When ndetermining na nform nof nbusiness norganization, nall nof nthe nfollowing nare
considered
n
EXCEPT
A) who nowns nthe nfirm.
B) the nowners' nrisks.
C) the ntax nramifications.
D) the nphysical nlocation nof nthe nbusiness.
18) This ntype nof nbusiness norganization nis nrelatively neasy nto nstart, nand nit nis nsubject
nto nmuch nlighter n regulatory nand npaperwork nburden nthan nother nbusiness
nforms.
A) sole nproprietorship
B) partnership
C) corporation
D) hybrid norganization
19) This ntype nof nbusiness norganization nis nentirely nlegally nindependent nfrom nits
nowners.
A) sole nproprietorship
B) partnership
C) public ncorporations
D) hybrid norganizations
FINANCE APPLICATIONS AND THEORY 6E
n n n n
CORNETT
n
Chapter 1- Answers are at the end of Each
n n n n n n n
20 chaptern
Chapter 1 n
Student name:
n n
1) Which nstatements(s) nis/are ntrue nfor nsuccessful napplication nof nfinancial ntheories?
A) The neconomy nwill nbe nmore nproductive.
B) Individual’s nwealth nwill ngrow.
C) The neconomy nwill nbe nmore nproductive nand nindividual's nwealth nwill ngrow.
D) None nof nthese nchoices nare ncorrect.
2) Not nall ncash na ncompany ngenerates nwill nbe nreturned nto nthe ninvestors. nWhich nof
nthe nfollowing n will nNOT nreduce nthe namount nof ncapital nreturned nto nthe
ninvestors?
A) retained nearnings
B) taxes
C) dividends
3) This nsubarea nof nfinance ninvolves nmethods nand ntechniques nto nmake nappropriate
ndecisions n about nwhat nkinds nof nsecurities nto nown, nwhich nfirms' nsecurities nto
nbuy, nand nhow n to nbe npaid nback n in nthe nform nthat nthe ninvestor nwishes.
A) real nmarkets
B) investments
C) financial nmanagement
4) This nsubarea nof nfinance nlooks nat nfirm ndecisions nin nacquiring nand nutilizing ncash
received nfrom n investors nor nfrom nretained nearnings.
n
A) investments
B) financial nmanagement
C) financial ninstitutions nand nmarkets
,5) Financial nmanagement ninvolves ndecisions nabout nwhich nof nthe nfollowing?
A) Which nprojects nto nfund
B) How nto nminimize ntaxation
C) What ntype nof ncapital nshould nbe nraised
D) All nof nthese nchoices nare ncorrect.
6) This nsubarea nof nfinance nhelps nfacilitate nthe ncapital nflows nbetween ninvestors nand
ncompanies.
A) investments
B) financial nmanagement
C) treasury nmanagement
D) financial ninstitutions nand nmarkets
7) This nsubarea nof nfinance nis nimportant nfor nadapting nto nthe nglobal neconomy.
A) investments
B) financial nmanagement
C) international nfinance
D) financial ninstitutions nand nmarkets
8) A npotential nfuture nnegative nimpact nto nvalue nand/or ncash nflows nis noften
ndiscussed nin nterms nof n probability nof nloss nand nthe nexpected nmagnitude nof nthe
nloss. nThis nis ncalled
A) options.
B) standard ndeviation.
C) coefficient nof nvariation.
D) risk.
9) This nis na nterm nto ndescribe nnon-physical nassets nlike nstocks nand nbonds nthat nget
ntheir nvalue nfrom n future ncash nflows.
A) investment
B) financial nasset
C) real nasset
D) financial nmarkets
,10) Which nof nthe nfollowing nis ndefined nas na ngroup nof nsecurities nthat nexhibit nsimilar
ncharacteristics, n behave nsimilarly nin nthe nmarketplace, nand nare nsubject nto nthe
nsame nlaws nand nregulations?
A) investments
B) asset nclasses
C) market ninstruments
D) financial nmarkets
11) The nmost ncommonly naccepted ngroups nof nasset nclasses ninclude nall nof nthe nfollowing
nexcept
A) stocks.
B) bonds.
C) machinery nand nequipment.
D) real nestate.
12) The is nthe ninterest nrate nat nwhich nbanks nand nother ndepository
ninstitutions nlend n reserve nbalances nto none nanother novernight; nthis nrate nheavily
ninfluences nother nshort-term nrates.
A) average ntax nrate
B) exchange nrate
C) federal nfunds nrate
D) none nof nthese nchoices nare ncorrect.
13) Which nof nthe nfollowing nstatements nregarding nquantitative neasing n(QE) nare ntrue?
A) QE nis na nmonetary npolicy ndesigned nto nincrease nthe nmoney nsupply nin
the neconomy n through nbuying nsecurities nin nthe nmarket nand
n
nlowering nshort-term ninterest nrates.
B) The nfirst nround nof nQE ninvolved nthe nFed nto npurchase npotentially ntoxic
nmortgage-backed n securities nfrom nbanks.
C) During nearly n2020 ndue nto nthe nCOVID-19 npandemic, nthe nFed ndropped nthe
nfederal nfunds n rate nto n1.25% nand nthen nagain n0.25 na nfew nmonths nlater.
D) All nof nthese nchoices nare ncorrect.
14) Which nof nthe nfollowing nis nthe nfirm's nhighest-level nfinancial nmanager?
A) chief nexecutive nofficer
B) chief nfinancial nofficer
C) board nof ndirectors
D) corporate ngovernance
, 15) Which nof nthe nfollowing nmanagers nwould nNOT nuse nfinance nprimarily?
A) operational nmanagers
B) marketing nmanagers
C) human nresource nmanagers
D) all nof nthese nchoices nare ncorrect.
16) Which nof nthe nfollowing npersonal ndecisions nis nimpacted nby nfinance?
A) borrowing nmoney nto npurchase ncars nor nhomes
B) making ncredit ncard npayments
C) making nretirement ndecisions
D) all nof nthese nchoices nare ncorrect.
17) When ndetermining na nform nof nbusiness norganization, nall nof nthe nfollowing nare
considered
n
EXCEPT
A) who nowns nthe nfirm.
B) the nowners' nrisks.
C) the ntax nramifications.
D) the nphysical nlocation nof nthe nbusiness.
18) This ntype nof nbusiness norganization nis nrelatively neasy nto nstart, nand nit nis nsubject
nto nmuch nlighter n regulatory nand npaperwork nburden nthan nother nbusiness
nforms.
A) sole nproprietorship
B) partnership
C) corporation
D) hybrid norganization
19) This ntype nof nbusiness norganization nis nentirely nlegally nindependent nfrom nits
nowners.
A) sole nproprietorship
B) partnership
C) public ncorporations
D) hybrid norganizations
