Test Bank with Complete Answer Guide – Foundations of Financial Management (17th Edition) By Block | All Chapters Covered | Rated A+ | Latest Edition

P R I M E D O C S

, Foundations of Financial Management, 17e (Block)
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.
N
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
U



P
2) Inflation is assumed to be a temporary problem that does not affect financial decisions.




R
R
Answer: FALSE
Difficulty: 1 Easy




I
Topic: Financial management decisions




M
Learning Objective: 01-01 The field of finance integrates concepts from economics, accounting,
SE
and a number of other areas.




E
Bloom's: Remember
Primedocs
AACSB: Reflective Thinking




D
Accessibility: Keyboard Navigation




O
3) Financial capital is composed of long-term plant and equipment, as well as other tangible
D
investments.




C
Answer: FALSE
O

S
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.
C
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
S
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

1
Copyright © 2019 McGraw-Hill Education. All rights reserved.
No reproduction or distribution without the prior written consent of McGraw-Hill Education.

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, 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.
N
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
U



P
6) In the mid 1950s, finance began to change to a more analytical, decision-oriented approach.




R
R
Answer: TRUE
Difficulty: 1 Easy




I
Topic: Introduction to corporate finance




M
Learning Objective: 01-01 The field of finance integrates concepts from economics, accounting,
SE
and a number of other areas.




E
Bloom's: Remember
AACSB: Reflective Thinking
Primedocs



D
Accessibility: Keyboard Navigation




O
7) Recently, the emphasis of financial management has been on the relationship between risk and
D
return.




C
Answer: TRUE
O
Difficulty: 1 Easy


S
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.
C
Bloom's: Understand
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
S
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
2
Copyright © 2019 McGraw-Hill Education. All rights reserved.
No reproduction or distribution without the prior written consent of McGraw-Hill Education.

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, 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.
N
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
U



P
10) Mortgage-backed securities were devalued by accounting standards because of the high credit
ratings (AAA).




R
R
Answer: FALSE




I
Explanation: These securities were devalued because borrowers defaulted on their loans and




M
didn't have the financial means to back up their loans in other ways.
SE
Difficulty: 1 Easy




E
Primedocs
Topic: Introduction to corporate finance
Learning Objective: 01-01 The field of finance integrates concepts from economics, accounting,




D
and a number of other areas.
Bloom's: Remember




O
AACSB: Reflective Thinking
D
Accessibility: Keyboard Navigation




C
11) "Credit default swaps" are one of several tools that Congress and the President of the United
O
States have jointly developed to ease the financial crisis that began in 2008.

Answer: FALSE
Difficulty: 1 Easy S
C
Topic: Introduction to corporate finance
Learning Objective: 01-01 The field of finance integrates concepts from economics, accounting,
and a number of other areas.
S
Bloom's: Understand
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation




3
Copyright © 2019 McGraw-Hill Education. All rights reserved.
No reproduction or distribution without the prior written consent of McGraw-Hill Education.

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