Angie Koslowski
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Quiz on Finance Chapter One: Overview of Finance, created by Angie Koslowski on 26/09/2015.

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Angie Koslowski
Created by Angie Koslowski almost 9 years ago
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Finance Chapter One: Overview of Finance

Question 1 of 20

1

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

Select one of the following:

  • True
  • False

Explanation

Question 2 of 20

1

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

Select one of the following:

  • True
  • False

Explanation

Question 3 of 20

1

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.

Select one of the following:

  • True
  • False

Explanation

Question 4 of 20

1

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

Select one of the following:

  • True
  • False

Explanation

Question 5 of 20

1

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.

Select one of the following:

  • True
  • False

Explanation

Question 6 of 20

1

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

Select one of the following:

  • True
  • False

Explanation

Question 7 of 20

1

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

Select one of the following:

  • True
  • False

Explanation

Question 8 of 20

1

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

Select one of the following:

  • True
  • False

Explanation

Question 9 of 20

1

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

Select one of the following:

  • True
  • False

Explanation

Question 10 of 20

1

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

Select one of the following:

  • True
  • False

Explanation

Question 11 of 20

1

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

Select one of the following:

  • Making financing decisions

  • Prepare financial statements

  • Make investment decisions

  • Perform financial analysis

Explanation

Question 12 of 20

1

The main goal of the financial manager is to

Select one of the following:

  • maximize profit

  • maximize shareholder wealth

  • minimize costs

Explanation

Question 13 of 20

1

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

Select one of the following:

  • economics

  • finance

  • accounting

  • banking

Explanation

Question 14 of 20

1

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

Select one of the following:

  • moderate

  • high

  • low

  • equal to a 30 day T-bill

Explanation

Question 15 of 20

1

The wealth of the shareholders of a corporation is represented by

Select one of the following:

  • price of stock

  • earnings per share

  • profits

  • cash flows

Explanation

Question 16 of 20

1

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

Select one of the following:

  • directors

  • shareholders

  • insiders

  • agents

Explanation

Question 17 of 20

1

Agency costs pose the biggest problem for

Select one of the following:

  • directors

  • shareholders

  • insiders

  • agents

Explanation

Question 18 of 20

1

The largest provider of funds in the financial system is

Select one of the following:

  • individuals

  • businesses

  • government agencies

  • Bill Gates

Explanation

Question 19 of 20

1

Investments, markets and institutions, and corporate finance are

Select one of the following:

  • not related

  • closely related

  • only moderately related

  • not normally thought of as "finance"

Explanation

Question 20 of 20

1

The problem with profit maximization is that it is

Select one of the following:

  • short sighted

  • ignores risk

  • ignores timing of cash flows

  • all of the above

Explanation

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