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?
Making financing decisions
Prepare financial statements
Make investment decisions
Perform financial analysis
The main goal of the financial manager is to
maximize profit
maximize shareholder wealth
minimize costs
___________ can be defined as the art and science of managing money
economics
finance
accounting
banking
When the risk of an investment is high, the rate of return required by the investor will be
moderate
high
low
equal to a 30 day T-bill
The wealth of the shareholders of a corporation is represented by
price of stock
earnings per share
profits
cash flows
If the managers of a company are not the owners of the company, they are considered
directors
shareholders
insiders
agents
Agency costs pose the biggest problem for
The largest provider of funds in the financial system is
individuals
businesses
government agencies
Bill Gates
Investments, markets and institutions, and corporate finance are
not related
closely related
only moderately related
not normally thought of as "finance"
The problem with profit maximization is that it is
short sighted
ignores risk
ignores timing of cash flows
all of the above