Finance Chapter One: Overview of Finance

The main goal of the financial manager is to increase the firm's overall profits

In a corporation, profits are generally measured in terms of earnings per share

There is a positive correlation that exists between risk and return. The higher the risk of an investment, the higher the required return will be on that investment.

A firm's earnings are a true representation of cash flows available to the stockholders

Agency costs are fees that are paid by the management of a corporation to compensate any investor that feels that they have suffered a loss due to the agency problem.

Because of tax benefits, financial managers prefer cash flows later rather than sooner

The ethical behavior of the financial manager has a substantial impact on the shareholder's wealth maximization concept

Information asymmetry means that all market participants have exactly the same information set with which to make decisions.

The best deals in the market will go to the first investor who can recognize them and act on them

The required rate of return is what you think you will get

Which of the following is not one of the primary activities of the financial manager?

The main goal of the financial manager is to

___________ can be defined as the art and science of managing money

When the risk of an investment is high, the rate of return required by the investor will be

The wealth of the shareholders of a corporation is represented by

If the managers of a company are not the owners of the company, they are considered

Agency costs pose the biggest problem for

The largest provider of funds in the financial system is

Investments, markets and institutions, and corporate finance are

The problem with profit maximization is that it is