Question 1

Financial managers perform different tasks developing a financial plan or budget,extending credit to customers,evaluating proposed large expenditures,and raising money to fund a firm's operations.

Accepted Answer

A) True 
 B)False

Question 2

The wealth of corporate owners is measured by the share price of a stock.

Accepted Answer

A) True 
 B)False

Question 3

The amount earned during the accounting period on each outstanding share of common stock is called ________.

Accepted Answer

A)   dividend per share
B)   earnings per share
C)   net profits after taxes
D)   book value per shareE) A) and B)
F) C) and D) B

Question 4

A higher earnings per share (EPS)does not necessarily translate into a higher stock price.

Accepted Answer

A) True 
 B)False

Question 5

Corporate owners receive return ________.

Accepted Answer

A)   by realizing gains through increases in share price and interest earnings
B)   by realizing gains through increases in share price and cash dividends
C)   through capital appreciation and retained earnings
D)   through interest earnings and earnings per shareE) B) and D)
F) A) and D)

Question 6

Which of the following forms of organizations is the easiest to form?

Accepted Answer

A)   sole proprietorships
B)   limited liability corporation
C)   limited partnership
D)   S-corporationsE) None of the above
F) C) and D)

Question 7

The primary economic principle used in managerial finance is ________.

Accepted Answer

A)   purchase power parity
B)   asset pricing theory
C)   Porter's theory of five forces
D)   marginal cost-benefit analysisE) A) and B)
F) All of the above

Question 8

Agency problem arises when managers deviate from the goal of maximisation of shareholder wealth by placing their personal goals ahead of the goals of shareholders.

Accepted Answer

A) True 
 B)False

Question 9

The Sarbanes-Oxley Act of 2002 was passed in response to ________.

Accepted Answer

A)   insider trading activities
B)   false disclosures in financial reporting
C)   the decline in technology stocks
D)   the agency issueE) All of the above
F) None of the above

Question 10

A capital expenditures analyst/manager is responsible for the evaluation and recommendation of proposed asset investments.

Accepted Answer

A) True 
 B)False

Question 11

A controller administers a firm's credit policy by analyzing or managing the evaluation of credit applications,extending credit,and monitoring and collecting accounts receivable.

Accepted Answer

A) True 
 B)False

Question 12

Managerial finance ________.

Accepted Answer

A)   involves tasks such as budgeting, financial forecasting, cash management, and funds procurement
B)   involves the design and delivery of advice and financial products
C)   recognizes funds on an accrual basis
D)   devotes the majority of its attention to the collection and presentation of financial dataE) None of the above
F) B) and C)

Question 13

Marginal analysis states that financial decisions should be made and actions should be taken only when ________.

Accepted Answer

A)   marginal revenue equals marginal cost
B)   benefits equal costs
C)   added benefits exceed added costs
D)   added benefits are greater than zeroE) C) and D)
F) None of the above C

Question 14

Using certain standardized and generally accepted principles,an accountant prepares financial statements that recognize revenue at the point of sale and expenses when incurred.

Accepted Answer

A) True 
 B)False

Question 15

A financial manager's investment decisions determine ________.

Accepted Answer

A)   both the mix and the type of assets found on the firm's balance sheet
B)   both the mix and the type of liabilities found on the firm's balance sheet
C)   both the mix and the type of assets and liabilities found on the firm's balance sheet
D)   both the mix and the type of short-term and long-term financingE) B) and D)
F) A) and B)

Question 16

Dividend payments change directly with changes in earnings per share.

Accepted Answer

A) True 
 B)False  False

Question 17

Which of the following is a measure of profit maximization to shareholders?

Accepted Answer

A)   the timing of returns
B)   earnings per share
C)   current assets
D)   market risk premiumE) A) and B)
F) B) and D)

Question 18

Which of the following is one of the key activities of a financial manager?

Accepted Answer

A)   making financing decisions
B)   managing cost accounting
C)   managing financial accounting
D)   making legal policy decisionsE) A) and B)
F) A) and C)

Question 19

In large companies,CEOs are legally responsible for coordinating the assets and liabilities of employees' pension fund.

Accepted Answer

A) True 
 B)False

Question 20

A financial manager's primary activities include making investment and financing decisions.

Accepted Answer

A) True 
 B)False

Exam 1: The Role of Managerial Finance

Financial managers perform different tasks developing a financial plan or budget,extending credit to customers,evaluating proposed large expenditures,and raising money to fund a firm's operations.

Correct AnswerverifiedShow Answer

The wealth of corporate owners is measured by the share price of a stock.

Correct AnswerverifiedShow Answer

The amount earned during the accounting period on each outstanding share of common stock is called ________.

Correct AnswerverifiedB

A higher earnings per share (EPS)does not necessarily translate into a higher stock price.

Correct AnswerverifiedShow Answer

Corporate owners receive return ________.

Correct AnswerverifiedShow Answer

Which of the following forms of organizations is the easiest to form?

Correct AnswerverifiedShow Answer

The primary economic principle used in managerial finance is ________.

Correct AnswerverifiedShow Answer

Agency problem arises when managers deviate from the goal of maximisation of shareholder wealth by placing their personal goals ahead of the goals of shareholders.

Correct AnswerverifiedShow Answer

The Sarbanes-Oxley Act of 2002 was passed in response to ________.

Correct AnswerverifiedShow Answer

A capital expenditures analyst/manager is responsible for the evaluation and recommendation of proposed asset investments.

Correct AnswerverifiedShow Answer

A controller administers a firm's credit policy by analyzing or managing the evaluation of credit applications,extending credit,and monitoring and collecting accounts receivable.

Correct AnswerverifiedShow Answer

Managerial finance ________.

Correct AnswerverifiedShow Answer

Marginal analysis states that financial decisions should be made and actions should be taken only when ________.

Correct AnswerverifiedC

Using certain standardized and generally accepted principles,an accountant prepares financial statements that recognize revenue at the point of sale and expenses when incurred.

Correct AnswerverifiedShow Answer

A financial manager's investment decisions determine ________.

Correct AnswerverifiedShow Answer

Dividend payments change directly with changes in earnings per share.

Correct AnswerverifiedFalse

Which of the following is a measure of profit maximization to shareholders?

Correct AnswerverifiedShow Answer

Which of the following is one of the key activities of a financial manager?

Correct AnswerverifiedShow Answer

In large companies,CEOs are legally responsible for coordinating the assets and liabilities of employees' pension fund.

Correct AnswerverifiedShow Answer

A financial manager's primary activities include making investment and financing decisions.

Correct AnswerverifiedShow Answer

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B

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C

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False

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