FIN301 Principles of Finance 1 2025
Questions and Answers
Agency costs include all of the following except: - ....ANSWER☑️☑️...-a. Expenditures to
monitor management's actions
b. Flotation costs
c. Providing stock as part of management's compensation
d. Bonding expenditures
B
Among the most important agency relationships in the context of finance is (are) the
relationship(s) between ____. - ....ANSWER☑️☑️...-a. Stockholders and creditors, and
management and workers
b. Management and creditors
c. Management and workers
d. Stockholders and creditors
D
…FOR STUDY PURPOSES ONLY…©️ 2025 ALL RIGHTS RESERVED… 1
,One method of decreasing the cash outflows of a firm is to - ....ANSWER☑️☑️...-a.
Decrease dividends
b. Decrease depreciation
c. Increase debt repayment
d. Increase capital expenditures
A
Agency problems may give rise to costs that ____ the market value of firms. -
....ANSWER☑️☑️...-a. Increase
b. Do not affect
c. Are not important to
d. Decrease
D
____ provide a direct measure of the success of decisions made by a firm's managers. -
....ANSWER☑️☑️...-a. Stock prices
b. Dividends per share
c. Sales
d. Profits
…FOR STUDY PURPOSES ONLY…©️ 2025 ALL RIGHTS RESERVED… 2
, A
The primary reason for the divergence between the shareholder wealth maximization
goal and the actual goals pursued by management has been attributed to -
....ANSWER☑️☑️...-a. Separation of social responsibility and stakeholders' concerns
b. Separation of personal welfare and long-run profit goals
c. Separation of ownership and control
d. The granting of "golden parachute" contracts
C
The controller normally has responsibility for all ____ related activities, while the
treasurer is normally concerned with ____. - ....ANSWER☑️☑️...-a. Acquisition, data
processing
b. Tax, financial accounting
c. Tax, cost accounting
d. Accounting, expenditure of funds
D
According to the shareholder wealth maximization goal, management should seek to
maximize the ____ of the ____ to owners. - ....ANSWER☑️☑️...-a. Present value;
expected pretax cash flows
b. Future value; expected future returns
…FOR STUDY PURPOSES ONLY…©️ 2025 ALL RIGHTS RESERVED… 3
Questions and Answers
Agency costs include all of the following except: - ....ANSWER☑️☑️...-a. Expenditures to
monitor management's actions
b. Flotation costs
c. Providing stock as part of management's compensation
d. Bonding expenditures
B
Among the most important agency relationships in the context of finance is (are) the
relationship(s) between ____. - ....ANSWER☑️☑️...-a. Stockholders and creditors, and
management and workers
b. Management and creditors
c. Management and workers
d. Stockholders and creditors
D
…FOR STUDY PURPOSES ONLY…©️ 2025 ALL RIGHTS RESERVED… 1
,One method of decreasing the cash outflows of a firm is to - ....ANSWER☑️☑️...-a.
Decrease dividends
b. Decrease depreciation
c. Increase debt repayment
d. Increase capital expenditures
A
Agency problems may give rise to costs that ____ the market value of firms. -
....ANSWER☑️☑️...-a. Increase
b. Do not affect
c. Are not important to
d. Decrease
D
____ provide a direct measure of the success of decisions made by a firm's managers. -
....ANSWER☑️☑️...-a. Stock prices
b. Dividends per share
c. Sales
d. Profits
…FOR STUDY PURPOSES ONLY…©️ 2025 ALL RIGHTS RESERVED… 2
, A
The primary reason for the divergence between the shareholder wealth maximization
goal and the actual goals pursued by management has been attributed to -
....ANSWER☑️☑️...-a. Separation of social responsibility and stakeholders' concerns
b. Separation of personal welfare and long-run profit goals
c. Separation of ownership and control
d. The granting of "golden parachute" contracts
C
The controller normally has responsibility for all ____ related activities, while the
treasurer is normally concerned with ____. - ....ANSWER☑️☑️...-a. Acquisition, data
processing
b. Tax, financial accounting
c. Tax, cost accounting
d. Accounting, expenditure of funds
D
According to the shareholder wealth maximization goal, management should seek to
maximize the ____ of the ____ to owners. - ....ANSWER☑️☑️...-a. Present value;
expected pretax cash flows
b. Future value; expected future returns
…FOR STUDY PURPOSES ONLY…©️ 2025 ALL RIGHTS RESERVED… 3
