Question 1

The primary goal of a publicly owned firm is:

Accepted Answer

A)  maximize profits.
B)  minimize shareholder risk.
C)  value creation.
D)  maximize revenues.E) A) and B)
F) A) and C)

Question 2

Day-to-day cash management is one of the fundamental concepts that a nonfinancial manager should understand in order to:

Accepted Answer

A)  better assess the e current environment in which the firm operates.
B)  better assess future financing requirements.
C)  better understand the role of capital markets in raising long-term funds.
D)  better measure and create value for the shareholders.E) A) and C)
F) B) and C)

Question 3

A corporate financial manager who is trying to create value for its shareholders:

Accepted Answer

A)  is not concerned with ethics but rather with writing iron-clad contracts.
B)  can safely ignore ethics as long as no laws are broken.
C)  must behave ethically to stay out of jail.
D)  is concerned with ethics because unethical behavior destroys trust,and businesses cannot function without a certain degree of trust.E) C) and D)
F) None of the above

Question 4

This form of business organization does not distinguish between business and personal assets:

Accepted Answer

A)  sole proprietorship.
B)  limited liability corporation.
C)  general partnership.
D)  Both A and CE) C) and D)
F) None of the above

Question 5

The creation of value is driven by what factors?

Accepted Answer

A)  Cash flow and growth
B)  Growth and risk
C)  Profitability and growth
D)  Reducing riskE) C) and D)
F) B) and D)

Question 6

Which of the following statements about the corporate form of business organization is TRUE?

Accepted Answer

A)  The corporate form has the disadvantage of double taxation relative to a sole proprietorship.
B)  The corporate form is preferred over the sole proprietorship because a corporation is easier to form and faces less regulation.
C)  Sole proprietorship is the most common form of business organization because liability is limited to the amount invested in the business by the sole proprietor.
D)  The corporate form has the advantage of unlimited liability.E) C) and D)
F) All of the above

Question 7

The financial manager is involved in these cash-related activities in the firm:

Accepted Answer

A)  investing,working capital management,and financing.
B)  real assets,financing,and investing
C)  operations,profitability,and financing
D)  investing,operating,and financing.E) All of the above
F) A) and B)

Question 8

The true owners of the corporation are the:

Accepted Answer

A)  holders of debt issues of the firm.
B)  board of directors of the firm.
C)  creditors.
D)  common stockholders.E) A) and D)
F) B) and D)

Question 9

Raising new capital through the sale of common equity is an example of which cash-related activity in the cash flow cycle?

Accepted Answer

A)  Operating activity
B)  Profitability activity
C)  Investing activity
D)  Financing activityE) A) and C)
F) C) and D)

Question 10

The main duties of financial managers are:

Accepted Answer

A)  assessing the current business situation and future financing needs.
B)  developing long-term financing strategies.
C)  assessing future investments.
D)  All of the above.E) A) and D)
F) None of the above

Question 11

Each functional area is,in some way,involved in the generation or consumption of cash.

Accepted Answer

A) True 
 B)False

Question 12

Financial managers work with the managers from the other functional areas of business.For example: When the financial manager provides funds for activities such as the development of products or services,they are probably working with which functional area?

Accepted Answer

A)  Human Resourses
B)  Information Technology
C)  Marketing
D)  OperationsE) None of the above
F) All of the above

Question 13

Which of the following best describes the role of financial managers?

Accepted Answer

A)  Maximization of the total market value of the firm's common stock
B)  Profit maximization
C)  Risk minimization
D)  None of the aboveE) B) and D)
F) C) and D)

Question 14

The ability to identify the key industry drivers of success is a fundamental concept that a nonfinancial manager should understand in order to:

Accepted Answer

A)  better assess the current environment in which the firm operates.
B)  better assess future financing requirements.
C)  better understand the role of capital markets in raising long-term funds.
D)  better measure and create value for shareholders.E) None of the above
F) A) and C)

Question 15

Which of the following are fundamental concepts that nonfinancial managers need to understand?

Accepted Answer

A)  How current business conditions can affect the firm's performance.
B)  How to project financial statements and future investment needs.
C)  How capital markets work to raise long-term capital.
D)  All of the above.E) A) and D)
F) A) and C)

Question 16

What does it mean to "maximize the value of the firm"? In general,how is value created? What factors determine value and how does each affect the value of the firm?

Accepted Answer

To maximize the value of the firm most c...

Question 17

Which of the following organizational forms accounts for the greatest number of firms?

Accepted Answer

A)  "S" Corporation
B)  Limited partnership
C)  Sole proprietorship
D)  "C" corporationE) A) and B)
F) B) and D)

Question 18

The distinguishing feature of a corporation is that:

Accepted Answer

A)  a corporation is a legally defined,artificial being,separate from its owners.
B)  there are no legal differences between the corporation and its owners.
C)  it spreads the liability for its corporate obligations to all shareholders.
D)  it provides limited liability only to small shareholders.E) A) and B)
F) A) and D)

Question 19

Limited partners may actively manage the business.

Accepted Answer

A) True 
 B)False

Question 20

Explain the differences between an S-corporation and a C corporation.

Accepted Answer

S corporations are limited to ...

Exam 1: Overview of Financial Management

Each functional area is,in some way,involved in the generation or consumption of cash.

Correct AnswerverifiedShow Answer

The distinguishing feature of a corporation is that:

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The true owners of the corporation are the:

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Which of the following best describes the role of financial managers?

Correct AnswerverifiedShow Answer

The main duties of financial managers are:

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The creation of value is driven by what factors?

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A corporate financial manager who is trying to create value for its shareholders:

Correct AnswerverifiedShow Answer

Financial managers work with the managers from the other functional areas of business.For example: When the financial manager provides funds for activities such as the development of products or services,they are probably working with which functional area?

Correct AnswerverifiedShow Answer

Which of the following are fundamental concepts that nonfinancial managers need to understand?

Correct AnswerverifiedShow Answer

This form of business organization does not distinguish between business and personal assets:

Correct AnswerverifiedShow Answer

The primary goal of a publicly owned firm is:

Correct AnswerverifiedShow Answer

What does it mean to "maximize the value of the firm"? In general,how is value created? What factors determine value and how does each affect the value of the firm?

Correct AnswerverifiedTo maximize the value of the firm most c...View AnswerShow Answer

Limited partners may actively manage the business.

Correct AnswerverifiedShow Answer

Day-to-day cash management is one of the fundamental concepts that a nonfinancial manager should understand in order to:

Correct AnswerverifiedShow Answer

The financial manager is involved in these cash-related activities in the firm:

Correct AnswerverifiedShow Answer

Explain the differences between an S-corporation and a C corporation.

Correct AnswerverifiedS corporations are limited to ...View AnswerShow Answer

Raising new capital through the sale of common equity is an example of which cash-related activity in the cash flow cycle?

Correct AnswerverifiedShow Answer

The ability to identify the key industry drivers of success is a fundamental concept that a nonfinancial manager should understand in order to:

Correct AnswerverifiedShow Answer

Which of the following organizational forms accounts for the greatest number of firms?

Correct AnswerverifiedShow Answer

Which of the following statements about the corporate form of business organization is TRUE?

Correct AnswerverifiedShow Answer

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To maximize the value of the firm most c...
View Answer

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S corporations are limited to ...
View Answer

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