Question 1

A corporation that operates ethically will notice certain benefits as it applies to shareholder wealth maximization.With shareholder wealth maximization in mind, all of the following could be experienced by an ethical corporation EXCEPT:

Accepted Answer

A)  The corporation can expect to have reduced litigation expense.
B)  The cooperation can expect to have greater agency costs.
C)  The corporation can expect to have reduced damages expenses.
D)  The corporation can expect to have a more favorable impression by customers and investors.

Question 2

The success of a firm is linked to its stakeholders.This group includes:

Accepted Answer

A)  community neighbors
B)  suppliers
C)  employees
D)  all of these

Question 3

deals with economic decisions of individuals, households, and firms.

Accepted Answer

A)  Economic accounting
B)  Microeconomics
C)  Blue Chip econometrics
D)  Macroeconomics

Question 4

Accounting is concerned primarily with matching:

Accepted Answer

A)  cost-based revenue and expenses
B)  tax liability and future cash flows
C)  revenue and long term debt
D)  inventory and cost of sales

Question 5

The difference between a firm's annual after-tax operating profit and its total annual cost of capital is known as:

Accepted Answer

A)  earned income
B)  Economic Value Added
C)  Managerial Value Added
D)  operating income

Question 6

are important because the financial health of a firm depends on the firm being able to generate sufficient cash to pay its creditors, employees, suppliers, and owners.

Accepted Answer

A)  cash sales
B)  cash flows
C)  cash profits
D)  net profits

Question 7

Techniques identified by John Casey that managers could keep in mind when addressing the ethical dimensions of a business problem include all of the following except:

Accepted Answer

A)  collect all the facts bearing on the problem
B)  clarify the parameters of the problem
C)  involve all parties with a financial interest in the outcome
D)  seek equity for those who may be affected

Question 8

provide a direct measure of the success of decisions made by a firm's managers.

Accepted Answer

A)  profits
B)  stock prices
C)  sales
D)  dividends per share

Question 9

There are five competitive forces that influence an industry's structure.

Accepted Answer

1.The threat of new entrants.
...

Question 10

Among the most important agency relationships in the context of finance is (are)  the relationship(s)  between .

Accepted Answer

A)  stockholders and creditors
B)  management and workers
C)  stockholders and creditors, and management and workers
D)  management and creditors

Question 11

Examples of agency costs incurred by shareholders to minimize agency problems are:

Accepted Answer

A)  Expenditures associated with independent auditing.
B)  Expenditures associated with SEC approval.
C)  Expenditures associated with monitoring management's actions
D)  Expenditures associated with inventory control.

Question 12

In a limited partnership, the limited partners may limit their:

Accepted Answer

A)  tax liability
B)  liability
C)  tax write-off
D)  ability to attract new products

Question 13

The existence of divergent objectives between owners and managers is one example of a class of problems arising from ____.

Accepted Answer

A)  social responsibility concerns
B)  age differences between managers and owners
C)  agency relationships
D)  union-management relations

Question 14

What is the advantage of an LLC over an LLP business form?

Accepted Answer

An LLC (or limited liability company) ha...

Question 15

All of the following are advantages of the corporate form of business organization EXCEPT:

Accepted Answer

A)  unlimited life
B)  unlimited liability
C)  flexibility in ownership change
D)  ability to raise capital

Question 16

There are three major factors that determine the market value of a company's share of stock.All of the following
Are factors EXCEPT:

Accepted Answer

A)  Cash flows
B)  Sales generated
C)  Timing of cash flows
D)  Risk taken to generate cash flows

Question 17

Preferred stock is considered priority stock.Explain this priority.

Accepted Answer

Common stock is a residual form of owner...

Question 18

All of the following are problems with the microeconomic profit maximization model except:

Accepted Answer

A)  the absence of a time dimension
B)  offers financial managers insights to a wide range of problems
C)  does not consider the risk of alternative decisions
D)  the problem of defining profits

Question 19

A major advantage of the corporate form of business over both sole proprietorships and partnerships is the

Accepted Answer

A)  limited liability
B)  reduction in taxes
C)  ease of formation
D)  ability to maintain ownership

Question 20

According to the shareholder wealth maximization goal, management should seek to maximize the of the to_______owners.

Accepted Answer

A)  present value;expected pretax cash flows
B)  future value;expected pretax cash flows
C)  present value;expected future returns
D)  future value;expected future returns

Exam 1: The Role and Objective of Financial Management

Techniques identified by John Casey that managers could keep in mind when addressing the ethical dimensions of a business problem include all of the following except:

Correct AnswerverifiedShow Answer

All of the following are problems with the microeconomic profit maximization model except:

Correct AnswerverifiedShow Answer

Accounting is concerned primarily with matching:

Correct AnswerverifiedShow Answer

There are five competitive forces that influence an industry's structure.

Correct Answerverified1.The threat of new entrants....View AnswerShow Answer

provide a direct measure of the success of decisions made by a firm's managers.

Correct AnswerverifiedShow Answer

The existence of divergent objectives between owners and managers is one example of a class of problems arising from ____.

Correct AnswerverifiedShow Answer

What is the advantage of an LLC over an LLP business form?

Correct AnswerverifiedAn LLC (or limited liability company) ha...View AnswerShow Answer

The difference between a firm's annual after-tax operating profit and its total annual cost of capital is known as:

Correct AnswerverifiedShow Answer

Examples of agency costs incurred by shareholders to minimize agency problems are:

Correct AnswerverifiedShow Answer

Preferred stock is considered priority stock.Explain this priority.

Correct AnswerverifiedCommon stock is a residual form of owner...View AnswerShow Answer

According to the shareholder wealth maximization goal, management should seek to maximize the of the to_______owners.

Correct AnswerverifiedShow Answer

There are three major factors that determine the market value of a company's share of stock.All of the following Are factors EXCEPT:

Correct AnswerverifiedShow Answer

A major advantage of the corporate form of business over both sole proprietorships and partnerships is the

Correct AnswerverifiedShow Answer

deals with economic decisions of individuals, households, and firms.

Correct AnswerverifiedShow Answer

A corporation that operates ethically will notice certain benefits as it applies to shareholder wealth maximization.With shareholder wealth maximization in mind, all of the following could be experienced by an ethical corporation EXCEPT:

Correct AnswerverifiedShow Answer

In a limited partnership, the limited partners may limit their:

Correct AnswerverifiedShow Answer

The success of a firm is linked to its stakeholders.This group includes:

Correct AnswerverifiedShow Answer

All of the following are advantages of the corporate form of business organization EXCEPT:

Correct AnswerverifiedShow Answer

are important because the financial health of a firm depends on the firm being able to generate sufficient cash to pay its creditors, employees, suppliers, and owners.

Correct AnswerverifiedShow Answer

Among the most important agency relationships in the context of finance is (are) the relationship(s) between .

Correct AnswerverifiedShow Answer

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1.The threat of new entrants.
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An LLC (or limited liability company) ha...
View Answer

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Common stock is a residual form of owner...
View Answer

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