FOUNDATIONS OF FINANCIAL MANAGEMENT, 17E (BLOCK)
i i i i i
CHAPTER 1THE GOALS AND ACTIVITIES OF FINANCIAL
i i i i i i
MANAGEMENT
i
1) As ifinance iemerged ias ia inew ifield, imuch iemphasis iwas iplaced ion imergers iand iacquisitions.
Answer: i TRUE
iDifficulty: i1 iEasy
Topic: i i Introduction ito icorporate ifinance
Learning iObjective: 01-01 iThe ifield iof ifinance iintegrates iconcepts ifrom ieconomics, iaccounting,
iand ia inumber iof iother iareas.
Bloom's: Remember
i AACSB: iReflective iThinking
Accessibility: Keyboard iNavigation
2) Inflation iis iassumed ito ibe ia itemporary iproblem ithat idoes inot iaffect ifinancial idecisions.
Answer: i FALSE
iDifficulty: i1 iEasy
Topic: Financial imanagement idecisions
Learning iObjective: 01-01 iThe ifield iof ifinance iintegrates iconcepts ifrom ieconomics, iaccounting,
iand ia inumber iof iother iareas.
Bloom's: Remember
i AACSB: iReflective iThinking
Accessibility: Keyboard iNavigation
3) Financial icapital iis icomposed iof ilong-term iplant iand iequipment, ias iwell ias iother
itangible iinvestments.
Answer: i FALSE
iDifficulty: i1 iEasy
Topic: i i Introduction ito icorporate ifinance
Learning iObjective: 01-01 iThe ifield iof ifinance iintegrates iconcepts ifrom ieconomics, iaccounting,
iand ia inumber iof iother iareas.
Bloom's: Remember
i AACSB: iReflective iThinking
Accessibility: Keyboard iNavigation
4) Real icapital iis icomposed iof ilong-term iplant iand iequipment.
Answer: i TRUE
iDifficulty: i1 iEasy
Topic: i i Introduction ito icorporate ifinance
Learning iObjective: 01-01 iThe ifield iof ifinance iintegrates iconcepts ifrom ieconomics, iaccounting,
iand ia inumber iof iother iareas.
Bloom's: Remember
1
Copyright i© i2019 iMcGraw-Hill iEducation. iAll irights ireserved.
No ireproduction ior idistribution iwithout ithe iprior iwritten iconsent iof iMcGraw-Hill
iEducation.
,AACSB: i Reflective iThinking
iAccessibility: i i Keyboard
iNavigation
5) During ithe i1930s, ifinancial ipractice irevolved iaround isuch itopics ias ithe ipreservation iof
icapital, imaintenance iof iliquidity, ithe ireorganization iof ifinancially itroubled icorporations, iand
ibankruptcy.
Answer: i TRUE
iDifficulty: i1 iEasy
Topic: i i Introduction ito icorporate ifinance
Learning iObjective: 01-01 iThe ifield iof ifinance iintegrates iconcepts ifrom ieconomics, iaccounting,
iand ia inumber iof iother iareas.
Bloom's: Remember
i AACSB: iReflective iThinking
Accessibility: Keyboard iNavigation
6) In ithe imid i1950s, ifinance ibegan ito ichange ito ia imore ianalytical, idecision-oriented iapproach.
Answer: i TRUE
iDifficulty: i1 iEasy
Topic: i i Introduction ito icorporate ifinance
Learning iObjective: 01-01 iThe ifield iof ifinance iintegrates iconcepts ifrom ieconomics, iaccounting,
iand ia inumber iof iother iareas.
Bloom's: Remember
i AACSB: iReflective iThinking
Accessibility: Keyboard iNavigation
7) Recently, ithe iemphasis iof ifinancial imanagement ihas ibeen ion ithe irelationship ibetween irisk
iand ireturn.
Answer: i TRUE
iDifficulty: i1 iEasy
Topic: i i Introduction ito icorporate ifinance
Learning iObjective: i 01-01 iThe ifield iof ifinance iintegrates iconcepts ifrom ieconomics,
iaccounting, iand ia inumber iof iother iareas.; i01-03 iThe irelationship iof irisk ito ireturn iis ia icentral
ifocus iof ifinance. iBloom's: i Understand
AACSB: i Analytical iThinking
iAccessibility: i i Keyboard
iNavigation
8) The ifirst iNobel iPrizes igiven ito ifinance iprofessors iwere ifor itheir icontributions ito
icapital istructure itheory iand iportfolio itheories iof irisk iand ireturn.
Answer: i TRUE
iDifficulty: i1 iEasy
Topic: i i Introduction ito icorporate ifinance
2
Copyright i© i2019 iMcGraw-Hill iEducation. iAll irights ireserved.
No ireproduction ior idistribution iwithout ithe iprior iwritten iconsent iof iMcGraw-Hill
iEducation.
,Learning iObjective: 01-01 iThe ifield iof ifinance iintegrates iconcepts ifrom ieconomics, iaccounting,
iand ia inumber iof iother iareas.
Bloom's: Remember
3
Copyright i© i2019 iMcGraw-Hill iEducation. iAll irights ireserved.
No ireproduction ior idistribution iwithout ithe iprior iwritten iconsent iof iMcGraw-Hill
iEducation.
, AACSB: Reflective iThinking
iAccessibility: Keyboard iNavigation
9) How iinvestors ihandle irisk iis ian iimportant itopic ithat iusually ionly ieconomists iobserve.
Answer: i i FALSE
Explanation: Behavioral ifinance iis isomething ithat ithe ifinance iindustry iputs iheavy iemphasis
ion. iDifficulty: i1 iEasy
Topic: i i Introduction ito icorporate ifinance
Learning iObjective: 01-01 iThe ifield iof ifinance iintegrates iconcepts ifrom ieconomics, iaccounting,
iand ia inumber iof iother iareas.
Bloom's: Remember
i AACSB: iReflective iThinking
Accessibility: Keyboard iNavigation
10) Mortgage-backed isecurities iwere idevalued iby iaccounting istandards ibecause iof ithe ihigh icredit
iratings i(AAA).
Answer: i i FALSE
Explanation: i These isecurities iwere idevalued ibecause iborrowers idefaulted ion itheir iloans iand
ididn't ihave ithe ifinancial imeans ito iback iup itheir iloans iin iother iways.
Difficulty: i1 iEasy
Topic: i i Introduction ito icorporate ifinance
Learning iObjective: 01-01 iThe ifield iof ifinance iintegrates iconcepts ifrom ieconomics, iaccounting,
iand ia inumber iof iother iareas.
Bloom's: Remember
i AACSB: iReflective iThinking
Accessibility: Keyboard iNavigation
11) "Credit idefault iswaps" iare ione iof iseveral itools ithat iCongress iand ithe iPresident iof ithe
iUnited iStates ihave ijointly ideveloped ito iease ithe ifinancial icrisis ithat ibegan iin i2008.
Answer: i FALSE
iDifficulty: i1 iEasy
Topic: i i Introduction ito icorporate ifinance
Learning iObjective: 01-01 iThe ifield iof ifinance iintegrates iconcepts ifrom ieconomics, iaccounting,
iand ia inumber iof iother iareas.
Bloom's: Understand
iAACSB: iAnalytical iThinking
Accessibility: Keyboard iNavigation
4
Copyright i© i2019 iMcGraw-Hill iEducation. iAll irights ireserved.
No ireproduction ior idistribution iwithout ithe iprior iwritten iconsent iof iMcGraw-Hill
iEducation.
i i i i i
CHAPTER 1THE GOALS AND ACTIVITIES OF FINANCIAL
i i i i i i
MANAGEMENT
i
1) As ifinance iemerged ias ia inew ifield, imuch iemphasis iwas iplaced ion imergers iand iacquisitions.
Answer: i TRUE
iDifficulty: i1 iEasy
Topic: i i Introduction ito icorporate ifinance
Learning iObjective: 01-01 iThe ifield iof ifinance iintegrates iconcepts ifrom ieconomics, iaccounting,
iand ia inumber iof iother iareas.
Bloom's: Remember
i AACSB: iReflective iThinking
Accessibility: Keyboard iNavigation
2) Inflation iis iassumed ito ibe ia itemporary iproblem ithat idoes inot iaffect ifinancial idecisions.
Answer: i FALSE
iDifficulty: i1 iEasy
Topic: Financial imanagement idecisions
Learning iObjective: 01-01 iThe ifield iof ifinance iintegrates iconcepts ifrom ieconomics, iaccounting,
iand ia inumber iof iother iareas.
Bloom's: Remember
i AACSB: iReflective iThinking
Accessibility: Keyboard iNavigation
3) Financial icapital iis icomposed iof ilong-term iplant iand iequipment, ias iwell ias iother
itangible iinvestments.
Answer: i FALSE
iDifficulty: i1 iEasy
Topic: i i Introduction ito icorporate ifinance
Learning iObjective: 01-01 iThe ifield iof ifinance iintegrates iconcepts ifrom ieconomics, iaccounting,
iand ia inumber iof iother iareas.
Bloom's: Remember
i AACSB: iReflective iThinking
Accessibility: Keyboard iNavigation
4) Real icapital iis icomposed iof ilong-term iplant iand iequipment.
Answer: i TRUE
iDifficulty: i1 iEasy
Topic: i i Introduction ito icorporate ifinance
Learning iObjective: 01-01 iThe ifield iof ifinance iintegrates iconcepts ifrom ieconomics, iaccounting,
iand ia inumber iof iother iareas.
Bloom's: Remember
1
Copyright i© i2019 iMcGraw-Hill iEducation. iAll irights ireserved.
No ireproduction ior idistribution iwithout ithe iprior iwritten iconsent iof iMcGraw-Hill
iEducation.
,AACSB: i Reflective iThinking
iAccessibility: i i Keyboard
iNavigation
5) During ithe i1930s, ifinancial ipractice irevolved iaround isuch itopics ias ithe ipreservation iof
icapital, imaintenance iof iliquidity, ithe ireorganization iof ifinancially itroubled icorporations, iand
ibankruptcy.
Answer: i TRUE
iDifficulty: i1 iEasy
Topic: i i Introduction ito icorporate ifinance
Learning iObjective: 01-01 iThe ifield iof ifinance iintegrates iconcepts ifrom ieconomics, iaccounting,
iand ia inumber iof iother iareas.
Bloom's: Remember
i AACSB: iReflective iThinking
Accessibility: Keyboard iNavigation
6) In ithe imid i1950s, ifinance ibegan ito ichange ito ia imore ianalytical, idecision-oriented iapproach.
Answer: i TRUE
iDifficulty: i1 iEasy
Topic: i i Introduction ito icorporate ifinance
Learning iObjective: 01-01 iThe ifield iof ifinance iintegrates iconcepts ifrom ieconomics, iaccounting,
iand ia inumber iof iother iareas.
Bloom's: Remember
i AACSB: iReflective iThinking
Accessibility: Keyboard iNavigation
7) Recently, ithe iemphasis iof ifinancial imanagement ihas ibeen ion ithe irelationship ibetween irisk
iand ireturn.
Answer: i TRUE
iDifficulty: i1 iEasy
Topic: i i Introduction ito icorporate ifinance
Learning iObjective: i 01-01 iThe ifield iof ifinance iintegrates iconcepts ifrom ieconomics,
iaccounting, iand ia inumber iof iother iareas.; i01-03 iThe irelationship iof irisk ito ireturn iis ia icentral
ifocus iof ifinance. iBloom's: i Understand
AACSB: i Analytical iThinking
iAccessibility: i i Keyboard
iNavigation
8) The ifirst iNobel iPrizes igiven ito ifinance iprofessors iwere ifor itheir icontributions ito
icapital istructure itheory iand iportfolio itheories iof irisk iand ireturn.
Answer: i TRUE
iDifficulty: i1 iEasy
Topic: i i Introduction ito icorporate ifinance
2
Copyright i© i2019 iMcGraw-Hill iEducation. iAll irights ireserved.
No ireproduction ior idistribution iwithout ithe iprior iwritten iconsent iof iMcGraw-Hill
iEducation.
,Learning iObjective: 01-01 iThe ifield iof ifinance iintegrates iconcepts ifrom ieconomics, iaccounting,
iand ia inumber iof iother iareas.
Bloom's: Remember
3
Copyright i© i2019 iMcGraw-Hill iEducation. iAll irights ireserved.
No ireproduction ior idistribution iwithout ithe iprior iwritten iconsent iof iMcGraw-Hill
iEducation.
, AACSB: Reflective iThinking
iAccessibility: Keyboard iNavigation
9) How iinvestors ihandle irisk iis ian iimportant itopic ithat iusually ionly ieconomists iobserve.
Answer: i i FALSE
Explanation: Behavioral ifinance iis isomething ithat ithe ifinance iindustry iputs iheavy iemphasis
ion. iDifficulty: i1 iEasy
Topic: i i Introduction ito icorporate ifinance
Learning iObjective: 01-01 iThe ifield iof ifinance iintegrates iconcepts ifrom ieconomics, iaccounting,
iand ia inumber iof iother iareas.
Bloom's: Remember
i AACSB: iReflective iThinking
Accessibility: Keyboard iNavigation
10) Mortgage-backed isecurities iwere idevalued iby iaccounting istandards ibecause iof ithe ihigh icredit
iratings i(AAA).
Answer: i i FALSE
Explanation: i These isecurities iwere idevalued ibecause iborrowers idefaulted ion itheir iloans iand
ididn't ihave ithe ifinancial imeans ito iback iup itheir iloans iin iother iways.
Difficulty: i1 iEasy
Topic: i i Introduction ito icorporate ifinance
Learning iObjective: 01-01 iThe ifield iof ifinance iintegrates iconcepts ifrom ieconomics, iaccounting,
iand ia inumber iof iother iareas.
Bloom's: Remember
i AACSB: iReflective iThinking
Accessibility: Keyboard iNavigation
11) "Credit idefault iswaps" iare ione iof iseveral itools ithat iCongress iand ithe iPresident iof ithe
iUnited iStates ihave ijointly ideveloped ito iease ithe ifinancial icrisis ithat ibegan iin i2008.
Answer: i FALSE
iDifficulty: i1 iEasy
Topic: i i Introduction ito icorporate ifinance
Learning iObjective: 01-01 iThe ifield iof ifinance iintegrates iconcepts ifrom ieconomics, iaccounting,
iand ia inumber iof iother iareas.
Bloom's: Understand
iAACSB: iAnalytical iThinking
Accessibility: Keyboard iNavigation
4
Copyright i© i2019 iMcGraw-Hill iEducation. iAll irights ireserved.
No ireproduction ior idistribution iwithout ithe iprior iwritten iconsent iof iMcGraw-Hill
iEducation.
