TEST BANK
FOUNDATIONS OF FINANCIAL MANAGEMENT 18TH
CANADIAN EDITION (MCGRAW HILL, 2022) BY STANLEY
B. BLOCK, GEOFFREY A. HIRT AND BARTLEY DANIELSEN,
ISBN NO; 9781265074654, ALL 21 CHAPTERS COVERED
Page 1 of 1651
, Test Bank for Foundations of Financial Management 18th Canadian Edition
(McGraw Hill, 2022) by Stanley B. Block, Geoffrey A. Hirt and Bartley
Danielsen, Isbn no; 9781265074654, all 21 Chapters Covered
Table of Contents
Part 1 Introduction
Ch. 1 The Goals and Activities of Financial Management
Part 2. Financial Analysis and Planning
Ch. 2 Review of Accounting
Ch. 3 Financial Analysis
Ch. 4 Financial Forecasting
Ch. 5 Operating and Financial Leverage
Part 3. Working Capital Management
Ch. 6 Working Capital and the Financing Decision
Ch. 7 Current Asset Management
Ch. 8 Sources of Short-Term Financing
Part 4. The Capital Budgeting Process
Ch. 9 The Time Value of Money
Ch. 10 Valuation and Rates of Return
Ch. 11 Cost of Capital
Ch. 12 The Capital Budgeting Decision
Ch. 13 Risk and Capital Budgeting
Part 5. Long-Term Financing
Ch. 14 Capital Markets
Ch. 15 Investment Banking: Public and Private Placement
Ch. 16 Long-Term Debt and Lease Financing
Ch. 17 Common and Preferred Stock Financing
Ch. 18 Dividend Policy and Retained Earnings
Ch. 19 Convertibles, Warrants and Derivatives
Part 6. Expanding the Perspective of Corporate Finance
Ch. 20 External Growth through Mergers
Ch. 21 International Financial Management
Page 2 of 1651
, Test Bank for Foundations of Financial Management 18th Canadian Edition (McGraw Hill,
2022) by Stanley B. Block, Geoffrey A. Hirt and Bartley Danielsen, Isbn no; 9781265074654
Chapter 01
1. What is the primary goal of financial management?
A. Increased earnings
B. Maximizing cash flow
C. Maximizing shareholder wealth
D. Minimizing risk of the firm
2. Proper risk-return management means that:
A. the firm should take as few risks as possible.
B. consistent with the objectives of the firm, an appropriate trade-off between risk and
return should be determined.
C. the firm should earn the highest return possible.
D. the firm should value future profits more highly than current profits.
3. Which of the following is not a major area of concern and emphasis in modern financial
management and in this text?
A. Inflation and its effect on profits
B. Stable short-term interest rates
C. Changing international environment
D. Increased reliance on debt
4. Which of the following is not a major area of concern and emphasis in modern financial
management and in this text?
A. Marginal analysis
B. Risk-return trade-off
C. Commodity trading
D. Changing financial institutions
5. The effect of the high rates of inflation experienced during the 1970s and early 1980s was
to make:
A. the gold standard was eliminated.
B. purchasing power increased.
C. interest rates fell.
D. capital budgeting decisions less reliable.
Page 3 of 1651
, 6. In the past, the study of finance has included:
A. operational efficiency.
B. employee relationships.
C. legal cases.
D. mergers and acquisitions.
7. A financial manager's goal of maximizing current or short-term earnings may not be
appropriate because:
A. it considers the timing of the benefits.
B. increased earnings may be accompanied by acceptably higher levels of risk.
C. share ownership is widely dispersed.
D. earnings are subjective; they can be defined in various ways such as accounting or
economic earnings.
8. One of the major disadvantages of a sole proprietorship is:
A. that there is unlimited liability to the owner.
B. the simplicity of decision making.
C. low organizational costs.
D. low operating costs.
9. The partnership form of organization:
A. avoids the double taxation of earnings and dividends found in the corporate form of
organization.
B. usually provides limited liability to the partners.
C. has unlimited life.
D. simplifies decision making.
10. A corporation is not:
A. owned by shareholders who enjoy the privilege of limited liability.
B. easily divisible between owners.
C. a separate legal entity with perpetual life.
D. a separate legal entity with limited life.
11. Inflation:
Page 4 of 1651
FOUNDATIONS OF FINANCIAL MANAGEMENT 18TH
CANADIAN EDITION (MCGRAW HILL, 2022) BY STANLEY
B. BLOCK, GEOFFREY A. HIRT AND BARTLEY DANIELSEN,
ISBN NO; 9781265074654, ALL 21 CHAPTERS COVERED
Page 1 of 1651
, Test Bank for Foundations of Financial Management 18th Canadian Edition
(McGraw Hill, 2022) by Stanley B. Block, Geoffrey A. Hirt and Bartley
Danielsen, Isbn no; 9781265074654, all 21 Chapters Covered
Table of Contents
Part 1 Introduction
Ch. 1 The Goals and Activities of Financial Management
Part 2. Financial Analysis and Planning
Ch. 2 Review of Accounting
Ch. 3 Financial Analysis
Ch. 4 Financial Forecasting
Ch. 5 Operating and Financial Leverage
Part 3. Working Capital Management
Ch. 6 Working Capital and the Financing Decision
Ch. 7 Current Asset Management
Ch. 8 Sources of Short-Term Financing
Part 4. The Capital Budgeting Process
Ch. 9 The Time Value of Money
Ch. 10 Valuation and Rates of Return
Ch. 11 Cost of Capital
Ch. 12 The Capital Budgeting Decision
Ch. 13 Risk and Capital Budgeting
Part 5. Long-Term Financing
Ch. 14 Capital Markets
Ch. 15 Investment Banking: Public and Private Placement
Ch. 16 Long-Term Debt and Lease Financing
Ch. 17 Common and Preferred Stock Financing
Ch. 18 Dividend Policy and Retained Earnings
Ch. 19 Convertibles, Warrants and Derivatives
Part 6. Expanding the Perspective of Corporate Finance
Ch. 20 External Growth through Mergers
Ch. 21 International Financial Management
Page 2 of 1651
, Test Bank for Foundations of Financial Management 18th Canadian Edition (McGraw Hill,
2022) by Stanley B. Block, Geoffrey A. Hirt and Bartley Danielsen, Isbn no; 9781265074654
Chapter 01
1. What is the primary goal of financial management?
A. Increased earnings
B. Maximizing cash flow
C. Maximizing shareholder wealth
D. Minimizing risk of the firm
2. Proper risk-return management means that:
A. the firm should take as few risks as possible.
B. consistent with the objectives of the firm, an appropriate trade-off between risk and
return should be determined.
C. the firm should earn the highest return possible.
D. the firm should value future profits more highly than current profits.
3. Which of the following is not a major area of concern and emphasis in modern financial
management and in this text?
A. Inflation and its effect on profits
B. Stable short-term interest rates
C. Changing international environment
D. Increased reliance on debt
4. Which of the following is not a major area of concern and emphasis in modern financial
management and in this text?
A. Marginal analysis
B. Risk-return trade-off
C. Commodity trading
D. Changing financial institutions
5. The effect of the high rates of inflation experienced during the 1970s and early 1980s was
to make:
A. the gold standard was eliminated.
B. purchasing power increased.
C. interest rates fell.
D. capital budgeting decisions less reliable.
Page 3 of 1651
, 6. In the past, the study of finance has included:
A. operational efficiency.
B. employee relationships.
C. legal cases.
D. mergers and acquisitions.
7. A financial manager's goal of maximizing current or short-term earnings may not be
appropriate because:
A. it considers the timing of the benefits.
B. increased earnings may be accompanied by acceptably higher levels of risk.
C. share ownership is widely dispersed.
D. earnings are subjective; they can be defined in various ways such as accounting or
economic earnings.
8. One of the major disadvantages of a sole proprietorship is:
A. that there is unlimited liability to the owner.
B. the simplicity of decision making.
C. low organizational costs.
D. low operating costs.
9. The partnership form of organization:
A. avoids the double taxation of earnings and dividends found in the corporate form of
organization.
B. usually provides limited liability to the partners.
C. has unlimited life.
D. simplifies decision making.
10. A corporation is not:
A. owned by shareholders who enjoy the privilege of limited liability.
B. easily divisible between owners.
C. a separate legal entity with perpetual life.
D. a separate legal entity with limited life.
11. Inflation:
Page 4 of 1651
