Question 1

Nations do not have the sovereignty to expropriate the assets of a firm without compensation.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following statements is correct?

Accepted Answer

A)   Given the multi-owner nature of most large companies, agency costs associated with perquisite consumption are not really a problem.
B)   Managers may operate in the shareholders' best interests, but they may also operate in their own personal best interests.As long as managers stay within the law, there simply are not any effective controls that shareholders can implement to control managerial decision making.
C)   Shareholder agency costs include the opportunity costs associated with constraining managerial freedom but do not include managerial salaries.
D)   An agency relationship exists when one or more persons hire another person to perform some service but withhold decision-making authority from that person.
E)   All of the above statements are false.F) A) and B)
G) C) and E)

Question 3

In a competitive marketplace, if managers deviate too far from making decisions that are consistent with shareholder wealth maximisation, they risk being disciplined by the market.Part of this discipline involves the threat of being taken over by groups who are more aligned with shareholder interests.

Accepted Answer

A) True 
 B)False

Question 4

In South Africa, the most common form of business is a __________, and the form of business that generates most of the sales and profits is a __________.

Accepted Answer

A)   company; company
B)   company; proprietorship
C)   proprietorship; partnership
D)   proprietorship; company
E)   company; partnershipF) C) and D)
G) A) and B)

Question 5

A proprietorship is an unincorporated business owned by one individual and the owner benefits from the limited liability for business which limits his losses to what he has invested in the company.

Accepted Answer

A) True 
 B)False

Question 6

One way to state the decision framework most useful for carrying out the firm's objective is that the financial managers should seek that combination of assets, liabilities, and capital which will generate the largest expected projected income over the relevant time horizon.

Accepted Answer

A) True 
 B)False

Question 7

Normal profits are those that result in rates of return that are just sufficient to attract new capital in financial markets.

Accepted Answer

A) True 
 B)False

Question 8

Managers of firms using accounting manipulations to inflate current earnings are likely to generate long-term benefits to the shareholders of the firm.

Accepted Answer

A) True 
 B)False

Question 9

All of the following are external factors that influence the share prices of the firm except

Accepted Answer

A)   legal constraints
B)   capital structure
C)   tax laws
D)   general level of economic activity
E)   conditions in the stock marketF) A) and D)
G) All of the above

Question 10

A financial manager's task is to make decisions concerning the acquisition and use of funds for the greatest benefit of the firm.

Accepted Answer

A) True 
 B)False

Exam 1: An Overview of Managerial Finance

In South Africa, the most common form of business is a , and the form of business that generates most of the sales and profits is a .

Correct Answer
verified

Normal profits are those that result in rates of return that are just sufficient to attract new capital in financial markets.

Correct Answer
verified

Nations do not have the sovereignty to expropriate the assets of a firm without compensation.

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

A financial manager's task is to make decisions concerning the acquisition and use of funds for the greatest benefit of the firm.

Correct Answer
verified

A proprietorship is an unincorporated business owned by one individual and the owner benefits from the limited liability for business which limits his losses to what he has invested in the company.

Correct Answer
verified

All of the following are external factors that influence the share prices of the firm except

Correct Answer
verified

Correct Answer
verified

Managers of firms using accounting manipulations to inflate current earnings are likely to generate long-term benefits to the shareholders of the firm.

Correct Answer
verified

One way to state the decision framework most useful for carrying out the firm's objective is that the financial managers should seek that combination of assets, liabilities, and capital which will generate the largest expected projected income over the relevant time horizon.

Correct Answer
verified

Exam 1: An Overview of Managerial Finance

In South Africa, the most common form of business is a __________, and the form of business that generates most of the sales and profits is a __________.

Correct AnswerverifiedShow Answer

Normal profits are those that result in rates of return that are just sufficient to attract new capital in financial markets.

Correct AnswerverifiedShow Answer

Nations do not have the sovereignty to expropriate the assets of a firm without compensation.

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

A financial manager's task is to make decisions concerning the acquisition and use of funds for the greatest benefit of the firm.

Correct AnswerverifiedShow Answer

A proprietorship is an unincorporated business owned by one individual and the owner benefits from the limited liability for business which limits his losses to what he has invested in the company.

Correct AnswerverifiedShow Answer

All of the following are external factors that influence the share prices of the firm except

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Managers of firms using accounting manipulations to inflate current earnings are likely to generate long-term benefits to the shareholders of the firm.

Correct AnswerverifiedShow Answer

One way to state the decision framework most useful for carrying out the firm's objective is that the financial managers should seek that combination of assets, liabilities, and capital which will generate the largest expected projected income over the relevant time horizon.

Correct AnswerverifiedShow Answer

In South Africa, the most common form of business is a , and the form of business that generates most of the sales and profits is a .

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

Correct Answer
verified