Question 1

Capital budgeting includes the evaluation of which of the following?

Accepted Answer

A)  size of future cash flows only
B)  size and timing of future cash flows only
C)  timing and risk of future cash flows only
D)  risk and size of future cash flows only
E)  size,timing,and risk of future cash flowsF) A) and B)
G) A) and C)

Question 2

Large Australian company stocks such as BHP and Telstra:

Accepted Answer

A)  can only trade on the ASX
B)  can trade on the stock exchange of their choosing as long as they qualify for listing
C)  trade only in dealer markets
D)  are sold to investors as private placement and are held to maturity
E)  trade over the counterF) A) and B)
G) A) and C)

Question 3

The most important function of a financial market is:

Accepted Answer

A)  to facilitate the flow of funds between lenders and borrowers
B)  to provide a market for shares
C)  to provide information about an issuing company's financial situation
D)  to secure profits for brokers and agents
E)  to provide information about sharesF) B) and C)
G) B) and D)

Question 4

Working capital management includes which of the following?
I.controlling the inventory level
II.determining when to pay suppliers
III.deciding how much long-term debt to assume
IV.controlling the amount of cash that is readily available

Accepted Answer

A)  I and II only
B)  I and IV only
C)  II and III only
D)  I,II and IV only
E)  II,III and IV onlyF) A) and B)
G) None of the above

Question 5

Working capital management includes which one of the following?

Accepted Answer

A)  deciding which new projects to accept
B)  deciding whether to purchase a new machine or fix a current machine
C)  determining which customers will be granted credit
D)  determining how many new shares of stock should be issued
E)  establishing the target debt-equity ratioF) B) and E)
G) None of the above C

Question 6

A corporation:

Accepted Answer

A)  can neither sue another party nor be sued
B)  may not own property
C)  may enter into contracts to borrow funds
D)  can issue its own shares but cannot purchase shares in another entity
E)  can be formed by an oral agreement amongst the shareholdersF) A) and E)
G) A) and D)

Question 7

The primary goal of financial management is to maximise the:

Accepted Answer

A)  current net income
B)  net working capital
C)  number of shares outstanding
D)  market value of the existing stock
E)  capital structureF) A) and E)
G) A) and D)

Question 8

Will and Bill both enjoy sunshine,water,and surfboards.Thus,the two friends decided to create a business together in Sydney renting surfboards,paddle boats,and inflatable devices.Will and Bill will equally share in the decision making and in the profits or losses.Which type of business did they create if they both have full personal liability for the firm's debts?

Accepted Answer

A)  sole proprietorship
B)  limited partnership
C)  corporation
D)  joint stock company
E)  general partnershipF) B) and C)
G) None of the above

Question 9

The amount of debt and equity used by a firm to finance its operations is called the
Firm's:

Accepted Answer

A)  debt ratio
B)  working capital ratio
C)  capital structure
D)  financial position
E)  cash positionF) A) and C)
G) A) and B)

Question 10

Which one of the following functions should be assigned to the treasurer rather than the controller?

Accepted Answer

A)  data processing
B)  cost accounting
C)  tax management
D)  cash management
E)  financial accountingF) A) and E)
G) A) and D)

Question 11

Which one of the following statements correctly applies to a sole proprietorship?

Accepted Answer

A)  The business entity has an unlimited life.
B)  The ownership can easily be transferred to another individual.
C)  The owner enjoys limited liability for the firm's debts.
D)  Debt financing is easy to arrange in the firm's name.
E)  Obtaining additional equity is dependent on the owner's personal finances.F) C) and D)
G) A) and D)

Question 12

Margie opened a used book store and is both the 100 per cent owner and the store's manager.Which type of business entity does Margie own if she is personally liable for all the store's debts?

Accepted Answer

A)  sole proprietorship
B)  limited partnership
C)  corporation
D)  joint stock company
E)  general partnershipF) A) and E)
G) A) and C)

Question 13

Which one of the following situations is most likely to create an agency conflict?

Accepted Answer

A)  compensating a manager based on his or her division's net income
B)  giving all employees a bonus if a certain level of efficiency is maintained
C)  hiring an independent consultant to study the operating efficiency of the firm
D)  rejecting a profitable project to protect employee jobs
E)  selling under-performing assets owned by the firmF) A) and C)
G) D) and E)

Question 14

Over-the-counter markets are __________ markets.

Accepted Answer

A)  dealer
B)  franchise
C)  private
D)  auction
E)  physicalF) D) and E)
G) A) and E) A

Question 15

Tim works for a large manufacturing company and is now in charge of all fixed asset purchases.In other words,Tim is in charge of:

Accepted Answer

A)  capital structure management
B)  asset allocation
C)  risk management
D)  capital budgeting
E)  working capital managementF) A) and B)
G) D) and E) D

Question 16

A securities market with a physical location that is designed to match buyers with
Sellers is called a(n) ________ market:

Accepted Answer

A)  dealer
B)  private
C)  auction
D)  franchise
E)  block saleF) A) and B)
G) C) and D)

Question 17

Which of the following is an example of the agency problem?

Accepted Answer

A)  Managers always invest in projects that have appropriate returns and that will increase shareholder wealth.
B)  Managers resign when they believe they have not always acted in the best interests of shareholders.
C)  Managers conduct an acquisition program purely to increase the size of an organisation.
D)  Managers do not look for new projects as they want to avoid business risk.
E)  Both C and D are examples of the agency problem.F) B) and D)
G) C) and D)

Question 18

The primary market refers to:

Accepted Answer

A)  the original sale of securities by the issuer
B)  transactions between two institutional shareholders
C)  the sale of securities by an individual shareholder
D)  the first trade of a firm's securities when the financial markets open in the morning
E)  all transactions on the NYSEF) B) and E)
G) A) and B)

Question 19

The legal papers which designate a firm's name,nature of business,and intended life
Are called the:

Accepted Answer

A)  corporate bylaws
B)  articles of incorporation or constitution
C)  partnership agreement
D)  joint stock company forms
E)  proprietary declarationF) B) and C)
G) A) and B)

Question 20

Which one of the following is a working capital decision?

Accepted Answer

A)  How should the firm raise additional capital to fund its expansion?
B)  What debt-equity ratio is best suited to our firm?
C)  What is the cost of debt financing?
D)  Which type of debt is best suited to finance our inventory?
E)  How much cash should the firm keep in reserve?F) A) and E)
G) C) and D)

Exam 1: Introduction to Financial Management

Capital budgeting includes the evaluation of which of the following?

Correct Answer
verified

Large Australian company stocks such as BHP and Telstra:

Correct Answer
verified

The most important function of a financial market is:

Correct Answer
verified

Working capital management includes which of the following? I.controlling the inventory level II.determining when to pay suppliers III.deciding how much long-term debt to assume IV.controlling the amount of cash that is readily available

Correct Answer
verified

Working capital management includes which one of the following?

Correct Answer
verified
C

A corporation:

Correct Answer
verified

The primary goal of financial management is to maximise the:

Correct Answer
verified

Correct Answer
verified

The amount of debt and equity used by a firm to finance its operations is called the Firm's:

Correct Answer
verified

Which one of the following functions should be assigned to the treasurer rather than the controller?

Correct Answer
verified

Which one of the following statements correctly applies to a sole proprietorship?

Correct Answer
verified

Margie opened a used book store and is both the 100 per cent owner and the store's manager.Which type of business entity does Margie own if she is personally liable for all the store's debts?

Correct Answer
verified

Which one of the following situations is most likely to create an agency conflict?

Correct Answer
verified

Over-the-counter markets are __________ markets.

Correct Answer
verified
A

Tim works for a large manufacturing company and is now in charge of all fixed asset purchases.In other words,Tim is in charge of:

Correct Answer
verified
D

A securities market with a physical location that is designed to match buyers with Sellers is called a(n) ________ market:

Correct Answer
verified

Which of the following is an example of the agency problem?

Correct Answer
verified

The primary market refers to:

Correct Answer
verified

The legal papers which designate a firm's name,nature of business,and intended life Are called the:

Correct Answer
verified

Which one of the following is a working capital decision?

Correct Answer
verified

Exam 1: Introduction to Financial Management

Capital budgeting includes the evaluation of which of the following?

Correct AnswerverifiedShow Answer

Large Australian company stocks such as BHP and Telstra:

Correct AnswerverifiedShow Answer

The most important function of a financial market is:

Correct AnswerverifiedShow Answer

Working capital management includes which of the following? I.controlling the inventory level II.determining when to pay suppliers III.deciding how much long-term debt to assume IV.controlling the amount of cash that is readily available

Correct AnswerverifiedShow Answer

Working capital management includes which one of the following?

Correct AnswerverifiedC

A corporation:

Correct AnswerverifiedShow Answer

The primary goal of financial management is to maximise the:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The amount of debt and equity used by a firm to finance its operations is called the Firm's:

Correct AnswerverifiedShow Answer

Which one of the following functions should be assigned to the treasurer rather than the controller?

Correct AnswerverifiedShow Answer

Which one of the following statements correctly applies to a sole proprietorship?

Correct AnswerverifiedShow Answer

Margie opened a used book store and is both the 100 per cent owner and the store's manager.Which type of business entity does Margie own if she is personally liable for all the store's debts?

Correct AnswerverifiedShow Answer

Which one of the following situations is most likely to create an agency conflict?

Correct AnswerverifiedShow Answer

Over-the-counter markets are __________ markets.

Correct AnswerverifiedA

Tim works for a large manufacturing company and is now in charge of all fixed asset purchases.In other words,Tim is in charge of:

Correct AnswerverifiedD

A securities market with a physical location that is designed to match buyers with Sellers is called a(n) ________ market:

Correct AnswerverifiedShow Answer

Which of the following is an example of the agency problem?

Correct AnswerverifiedShow Answer

The primary market refers to:

Correct AnswerverifiedShow Answer

The legal papers which designate a firm's name,nature of business,and intended life Are called the:

Correct AnswerverifiedShow Answer

Which one of the following is a working capital decision?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
C

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A

Correct Answer
verified
D

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified