Question 1

The internationalization of the financial markets has

Accepted Answer

A)   allowed firms such as McDonalds to raise capital around the world.
B)   raised the cost of capital.
C)   forced companies to price everything in U.S. dollars.
D)   all of these.E) B) and D)
F) All of the above

Question 2

The formation of a Subchapter S corporation is a way to circumvent the double taxation of a small corporation.

Accepted Answer

A) True 
 B)False

Question 3

Financial management requires both short-term activities as well as long-term planning such as raising funds.

Accepted Answer

A) True 
 B)False

Question 4

As finance emerged as a new field, much emphasis was placed on mergers and acquisitions.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is not an example of restructuring as discussed in the text?

Accepted Answer

A)   Repurchase of common stock
B)   Creating a new organizational chart
C)   Merging with companies in related industries
D)   Divesting of an unprofitable divisionE) A) and B)
F) A) and C)

Question 6

Agency Theory examines the relationship between companies and their customers.

Accepted Answer

A) True 
 B)False

Question 7

High quality initial public offerings are usually sold in a primary market, such as the New York Stock Exchange. However, low-quality stocks must usually be sold in secondary markets, such as NASDAQ.

Accepted Answer

A) True 
 B)False

Question 8

In the mid 1950s, finance began to change to a more analytical, decision-oriented approach.

Accepted Answer

A) True 
 B)False

Question 9

New issues are sold in the secondary market.

Accepted Answer

A) True 
 B)False

Question 10

Corporate governance issues have become less important to the financial community during the first decade of the new millennium.

Accepted Answer

A) True 
 B)False

Question 11

Capital markets refer to those markets dealing with short-term securities having a life of one year or less.

Accepted Answer

A) True 
 B)False

Question 12

In the United States, stocks sold on either the New York Stock Exchange or NASDAQ are considered sold in the primary market.

Accepted Answer

A) True 
 B)False

Question 13

Inflation is assumed to be a temporary problem that does not affect financial decisions.

Accepted Answer

A) True 
 B)False

Question 14

Timing is not a particularly important consideration in financial decisions.

Accepted Answer

A) True 
 B)False

Question 15

The Internet has affected the financial markets by

Accepted Answer

A)   creating more competition between markets.
B)   pushing the cost of trading down.
C)   forcing brokerage companies to consolidate.
D)   all of these.E) A) and C)
F) A) and B)

Question 16

The Internet has accounted for an acceleration of productivity for "old economy" firms.

Accepted Answer

A) True 
 B)False

Question 17

Match the following with the questions below:

Accepted Answer

The answer of Match the following with the questions below:
...

Question 18

Real Capital is composed of long-term plant and equipment.

Accepted Answer

A) True 
 B)False

Question 19

A Subchapter S corporation

Accepted Answer

A)   is similar to a partnership in that it carries unlimited liability.
B)   is a separate legal entity which is treated like a normal corporation.
C)   has all the organizational benefits of a corporation and its income is only taxed once.
D)   all of these.E) A) and C)
F) A) and B)

Question 20

A corporation is

Accepted Answer

A)   owned by stockholders who enjoy the privilege of limited liability.
B)   easily divisible between owners.
C)   a separate legal entity with perpetual life.
D)   all of these.E) A) and B)
F) A) and C)

Exam 1: The Goals and Functions of Financial Management

Corporate governance issues have become less important to the financial community during the first decade of the new millennium.

Correct AnswerverifiedShow Answer

Timing is not a particularly important consideration in financial decisions.

Correct AnswerverifiedShow Answer

Financial management requires both short-term activities as well as long-term planning such as raising funds.

Correct AnswerverifiedShow Answer

In the United States, stocks sold on either the New York Stock Exchange or NASDAQ are considered sold in the primary market.

Correct AnswerverifiedShow Answer

Inflation is assumed to be a temporary problem that does not affect financial decisions.

Correct AnswerverifiedShow Answer

The Internet has accounted for an acceleration of productivity for "old economy" firms.

Correct AnswerverifiedShow Answer

A Subchapter S corporation

Correct AnswerverifiedShow Answer

Capital markets refer to those markets dealing with short-term securities having a life of one year or less.

Correct AnswerverifiedShow Answer

Agency Theory examines the relationship between companies and their customers.

Correct AnswerverifiedShow Answer

In the mid 1950s, finance began to change to a more analytical, decision-oriented approach.

Correct AnswerverifiedShow Answer

New issues are sold in the secondary market.

Correct AnswerverifiedShow Answer

The formation of a Subchapter S corporation is a way to circumvent the double taxation of a small corporation.

Correct AnswerverifiedShow Answer

The internationalization of the financial markets has

Correct AnswerverifiedShow Answer

The Internet has affected the financial markets by

Correct AnswerverifiedShow Answer

Real Capital is composed of long-term plant and equipment.

Correct AnswerverifiedShow Answer

High quality initial public offerings are usually sold in a primary market, such as the New York Stock Exchange. However, low-quality stocks must usually be sold in secondary markets, such as NASDAQ.

Correct AnswerverifiedShow Answer

A corporation is

Correct AnswerverifiedShow Answer

Which of the following is not an example of restructuring as discussed in the text?

Correct AnswerverifiedShow Answer

As finance emerged as a new field, much emphasis was placed on mergers and acquisitions.

Correct AnswerverifiedShow Answer

Match the following with the questions below:

Correct AnswerverifiedShow Answer

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