TEST BANK FOR Foundations of Finance, 10th edition by J. Keown, John D. Martin ISBN:9780134897264 COMPLETE GUIDE ALL CHAPTERS COVERED 100% VERIFIED A+ GRADE ASSURED!!!!!NEW LATEST UPDATE!!!!!!

,Foundations of Finance, 10e (Keown/Martin/Petty) zl zl zl zl




Chapter 1 An Introduction to the Foundations of Financial Management
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Learning Objective 1.1 zl zl




1) Financial management deals with the maintenance and creation of economic value or wealth. A
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nswer: TRUE z l




Diff: 1 zl Page Ref: 3 zl zl




Keywords: Financial Management Learnin zl zl zl




g Obj.: L.O. 1.1
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AACSB: Reflective Thinking z l zl




2) Each financial decision made by a corporate manager can be evaluated by its direct impact on the co
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rporation's stock price. zl zl




Answer: FALSE Dif zl zl




f: 1 zl Page Ref: 4 zl zl




Keywords: Goal of the Firm L zl zl zl zl zl




earning Obj.: L.O. 1.1 AACS zl zl zl zl




B: Reflective Thinking
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3) The fundamental goal of a business is to maximize the retained earnings available to the corporation's sh
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areholders.
Answer: FALSE Dif zl zl




f: 1 zl Page Ref: 3 zl zl




Keywords: Goal of the Firm L zl zl zl zl zl




earning Obj.: L.O. 1.1 AACS zl zl zl zl




B: Reflective Thinking
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4) Shareholder wealth maximization means maximizing the price of the existing common stock. A
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nswer: TRUE z l




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angelinas
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,Keywords: Shareholder Wealth, Goal of the Firm Lear
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ning Obj.: L.O. 1.1
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AACSB: Reflective Thinking z l zl




5) It is important to evaluate a corporate manager's financial decision by measuring the effect the decision
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should have on the corporation's stock price if everything else were held constant. Answ
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er: TRUE
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Diff: 2 zl Page Ref: 4 zl zl




Keywords: Goal of the Firm, Maximize Shareholder Wealth Learning
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Obj.: L.O. 1.1
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AACSB: Reflective Thinking z l zl




angelinas
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, 6) Corporate managers should accept investment projects that maximize profits in the short run because of
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the time value of money.
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Answer: FALSE Dif zl zl




f: 2 zl Page Ref: 4 zl zl




Keywords: Goal of the Firm, Profits, Time Value of Money Learning
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Obj.: L.O. 1.1 zl zl




AACSB: Reflective Thinking z l zl




7) The goal of the firm's financial managers should be the maximization of the total value of the firm's st
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ock.
Answer: TRUE Dif z l zl




f: 1 zl Page Ref: 3 zl zl




Keywords: Goal of the Firm L zl zl zl zl zl




earning Obj.: L.O. 1.1 AACS zl zl zl zl




B: Reflective Thinking
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8) The payment of a dividend to current shareholders will have no impact on a corporation's share price be
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cause the cash paid is not available to future potential shareholders who may want to buy the corporation'
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s stock.
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Answer: FALSE Dif zl zl




f: 1 zl Page Ref: 4 zl zl




Keywords: Goal of the Firm L zl zl zl zl zl




earning Obj.: L.O. 1.1 AACS zl zl zl zl




B: Reflective Thinking
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9) One problem with maximization of shareholder wealth as a goal is that it ignores risk taken by the fir
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m's financial decisions.
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Answer: FALSE Dif zl zl




f: 1 zl Page Ref: 4 zl zl




Keywords: Goal of the Firm L zl zl zl zl zl




earning Obj.: L.O. 1.1 AACS zl zl zl zl




B: Reflective Thinking
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angelinas
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