Complete Test bank for foundations of finance 10th edition by arthur j keown| newest version|ultimate guide 100% verified A+

TEST BANK
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,Foundations of Finance, 10e (Keown/Martin/Petty) b b b b




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




1) Financial management deals with the maintenance and creation of economic value or wealth.
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b Answer: TRUE b




Diff: 1 b Page Ref: 3 b b




Keywords: Financial Management b b




b Learning Obj.: L.O. 1.1 b b b




AACSB: Reflective Thinking b b




2) Each financial decision made by a corporate manager can be evaluated by its direct impact on the
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corporation's stock price.
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Answer: FALSE b




b Diff: 1 Page Ref: 4
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Keywords: Goal of the Firm b b b b




b Learning Obj.: L.O. 1.1 b b b




b AACSB: Reflective Thinking b b




3) The fundamental goal of a business is to maximize the retained earnings available to the corporation's
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shareholders.
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Answer: FALSE b




b Diff: 1 Page Ref: 3
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Keywords: Goal of the Firm b b b b




b Learning Obj.: L.O. 1.1 b b b




b AACSB: Reflective Thinking b b




4) Shareholder wealth maximization means maximizing the price of the existing common stock.
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b Answer: TRUE b




Diff: 1 b Page Ref: 3 b b




b angelinas

,Keywords: Shareholder Wealth, Goal of the Firm
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b Learning Obj.: L.O. 1.1
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AACSB: Reflective Thinking
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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.
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b Answer: TRUE b




Diff: 2 b Page Ref: 4 b b




Keywords: Goal of the Firm, Maximize Shareholder Wealth
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b Learning Obj.: L.O. 1.1
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AACSB: Reflective Thinking
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, 6) Corporate managers should accept investment projects that maximize profits in the short run because
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of the time value of money.
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Answer: FALSE b




b Diff: 2 Page Ref: 4
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Keywords: Goal of the Firm, Profits, Time Value of Money Learning
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b Obj.: L.O. 1.1
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AACSB: Reflective Thinking b b




7) The goal of the firm's financial managers should be the maximization of the total value of the firm's
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stock.
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Answer: TRUE b




b Diff: 1 Page Ref: 3
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Keywords: Goal of the Firm b b b b




b Learning Obj.: L.O. 1.1 b b b




b AACSB: Reflective Thinkingb b




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




b Diff: 1 Page Ref: 4
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Keywords: Goal of the Firm b b b b




b Learning Obj.: L.O. 1.1 b b b




b AACSB: Reflective Thinkingb b




9) One problem with maximization of shareholder wealth as a goal is that it ignores risk taken by the
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firm's financial decisions.
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Answer: FALSE b




b Diff: 1 Page Ref: 4
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Keywords: Goal of the Firm b b b b




b Learning Obj.: L.O. 1.1 b b b




b AACSB: Reflective Thinkingb b




b angelinas