quiz on fiannce

1."Shareholder wealth" in a firm is represented by:the number of people employed in the firm.

the book value of the firm's assets less the book value of its liabilities.

the amount of salary paid to its employees.

the market price per share of the firm's common stock.

2.The long-run objective of financial management is to:maximize earnings per share.

maximize the value of the firm's common stock.

maximize return on investment.

maximize market share.

3.What are the earnings per share (EPS) for a company that earned $100,000 last year in after-tax profits, has 200,000 common shares outstanding and $1.2 million in retained earning at the year end?$100,000

$6.00

$0.50

$6.50

4.A(n)would be an example of aprincipal,while a(n)would be an example of anagent.shareholder; manager

manager; owner

accountant; bondholder

shareholder; bondholder

5.The market price of a share of common stock is determined by:the board of directors of the firm.

the stock exchange on which the stock is listed.

the president of the company.

individuals buying and selling the stock.

6.The focal point of financial management in a firm is:the number and types of products or services provided by the firm.

the minimization of the amount of taxes paid by the firm.

the creation of value for shareholders.

the dollars profits earned by the firm.

7.The decision function of financial management can be broken down into thedecisions.financing and investment

investment, financing, and asset management

financing and dividend

capital budgeting, cash management, and credit management

8.The controller's responsibilities are primarilyin nature, while the treasurer's responsibilities are primarily related to.operational; financial management

financial management; accounting

accounting; financial management

financial management; operations

9.A company'sis (are) potentially the most effective instrument of good corporate governance.common stock shareholders

board of directors

top executive officers

10.___________ refers to meeting the needs of the present without compromising the ability of future generations to meet their own needs.Corporate Social Responsibility (CSR)

Sustainability

Convergence

Green Economics1. The field of finance is closely related to the fields of:

A)statistics and economics

B)statistics and risk analysis

C)economics and accounting

D)accounting and comparative return analysis

22. The first area of study to benefit from the focus in the 1950's to a more analytical, decision oriented approach was:

A)cash and inventory management

B)capital budgeting (allocating financial capital to the purchase of plant and equipment)

C)capital structure formulation (the balance between liabilities and equity)

D)dividend policy ( the relationship between dividends and earnings)

33. The ultimate measure of performance is:

A)the amount of the firm's earnings

B)how the earnings are valued by the investor

C)the firm's profit margin

D)return on the firm's total assets

44. Which of the following is not the responsibility of financial management?

A)allocation of funds to current and capital assets

B)obtaining the best mix of financing alternatives

C)preparation of the firm's accounting statements

D)development of an appropriate dividend policy

55. Which of the following are not among the daily activities of financial management?

A)sale of shares and bonds

B)credit management

C)inventory control

D)the receipt and disbursement of funds

66. A main benefit to the corporate form of organization is:

A)double taxation of corporate income

B)simplicity of decision making and low organizational complexity

C)limited liability for the corporate shareholders

D)a major management role exists for the firm's owners

77. In analyzing the firm, the investor should consider:

A)the risk inherent in the firm's operation

B)the time patterns over which the firm's earnings increase/decrease

C)the quality and reliability of the firm's reported earnings

D)all of the above should be considered

88. Agency theory examines the:

A)relationship between the owners and managers of the firm

B)insurability of the firm's assets

C)relationship between dividend policy and firm value

D)value of the firm relative to other firms in the industry

99. Financial markets:

A)exist as a vast global network of individuals and financial institutions

B)include a broad group representing lenders, borrowers, owners, institutional investors, corporations, government units and others

C)circulate information quickly that affects prices of securities

D)all of the above

1010.Capital is allocated by financial markets by:

A)a lottery system between investment dealers

B)pricing securities based on their risk and expected future cash flows

C)by pricing risky securities higher than low-risk securities

D)by a government risk-rating system based on AAA for low risk and CCC for high risk

11

11.The allocation of capital is determined by:

A)expected rates of return

B)the Bank of Canada

C)the initial sale of securities in the primary market

D)the size of the federal debt

12

12. The mix of debt and equity in a firm is referred to as the firm's:

A)primary capital

B)capital composition

C)cost of capital

D)capital structure

13

13. The main focus of finance for the last 40 years has been:

A)mergers and acquisitions

B)conglomerate firms

C)inflation

D)risk-return relationships

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