1.
|
|
__________ is concerned with the acquisition, financing, and management of assets with some overall goal in mind.
|
| Financial management |
| Profit maximization |
| Agency theory |
| Social responsibility |
|
2.
|
|
Jensen and Meckling showed that __________ can assure themselves that the __________ will make optimal decisions only if appropriate incentives are given and only if the __________ are monitored.
|
| principals; agents; agents |
| agents; principals; principals |
| principals; agents; principals |
| agents; principals; agents |
|
3.
|
|
__________ is concerned with the maximization of a firm's earnings after taxes.
|
| Shareholder wealth maximization |
| Profit maximization |
| Stakeholder maximization |
| EPS maximization |
|
4.
|
|
What is the most appropriate goal of the firm?
|
| Shareholder wealth maximization |
| Profit maximization |
| Stakeholder maximization |
| EPS maximization. |
|
5.
|
|
Which of the following statements is correct regarding profit maximization as the primary goal of the firm?
|
| Profit maximization considers the firm's risk level. |
| Profit maximization will not lead to increasing short-term profits at the expense of lowering expected future profits. |
| Profit maximization does consider the impact on individual shareholder's EPS. |
| Profit maximization is concerned more with maximizing net income than the stock price. |
|
6.
|
|
__________ is concerned with the branch of economics relating the behavior of principals and their agents.
|
| Financial management |
| Profit maximization |
| Agency theory |
| Social responsibility |
|
7.
|
|
A concept that implies that the firm should consider issues such as protecting the consumer, paying fair wages, maintaining fair hiring practices, supporting education, and considering environmental issues.
|
| Financial management |
| Profit maximization |
| Agency theory |
| Social responsibility |
|
8.
|
|
Which of the following is not normally a responsibility of the treasurer of the modern corporation but rather the controller?
|
| Budgets and forecasts |
| Asset management |
| Investment management |
| Financing management |
|
9.
|
|
The __________ decision involves determining the appropriate make-up of the right-hand side of the balance sheet.
|
| asset management |
| financing |
| investment |
| capital budgeting |
|
10.
|
|
To whom does the Treasurer most likely report?
|
| Chief Financial Officer |
| Vice President of Operations |
| Chief Executive Officer |
| Board of Directors |
|
11.
|
|
The authors of your textbook suggest that you need to understand financial management even if you have no intention of becoming a financial manager. One reason is that the successful manager of the not-too-distant future will need to be much more of a __________ who has the knowledge and ability to move not just vertically within an organization but horizontally as well. Developing __________ will be the rule, not the exception.
|
| specialist; specialties |
| generalist; general business skills |
| technician; quantitative skills |
| team player; cross-functional capabilities |
|
12.
|
|
The __________ decision involves a determination of the total amount of assets needed, the composition of the assets, and whether any assets need to be reduced, eliminated, or replaced.
|
| asset management. |
| financing |
| investment |
| accounting |
|
13.
|
|
How are earnings per share calculated?
|
| Use the income statement to determine earnings after taxes (net income) and divide by the previous period's earnings after taxes. Then subtract 1 from the previously calculated value. |
| Use the income statement to determine earnings after taxes (net income) and divide by the number of common shares outstanding. |
| Use the income statement to determine earnings after taxes (net income) and divide by the number of common and preferred shares outstanding. |
| Use the income statement to determine earnings after taxes (net income) and divide by the forecasted period's earnings after taxes. Then subtract 1 from the previously calculated value. |
|
14.
|
|
According to the text's authors, what is the most important of the three financial management decisions?
|
| Asset management decision |
| Financing decision |
| Investment decision |
| Accounting decision |
|
15.
|
|
The __________ decision involves efficiently managing the assets on the balance sheet on a day-to-day basis, especially current assets.
|
| asset management |
| financing |
| investment |
| accounting |
|
16.
|
|
Which of the following is not a perquisite (perk)?
|
| Company-provided automobile |
| Expensive office |
| Salary |
| Country club membership |
|
17.
|
|
Which of the following is not normally a responsibility of the controller of the modern corporation?
|
| Budgets and forecasts |
| Asset management |
| Financial reporting to the IRS |
| Cost accounting |
|
18.
|
|
All constituencies with a stake in the fortunes of the company are known as __________.
|
| shareholders |
| stakeholders |
| creditors |
| customers |
|
19.
|
|
Which of the following statements is not correct regarding earnings per share (EPS) maximization as the primary goal of the firm?
|
| EPS maximization ignores the firm's risk level. |
| EPS maximization does not specify the timing or duration of expected EPS. |
| EPS maximization naturally requires all earnings to be retained. |
| EPS maximization is concerned with maximizing net income. |
|
20.
|
|
__________ is concerned with the maximization of a firm's stock price.
|
| Shareholder wealth maximization |
| Profit maximization |
| Stakeholder welfare maximization |
| EPS maximization |
