Chapter 1 Classroom & DSM

The primary goal of the financial manager is to maximize shareholder wealth maximize profits minimize costs maximize stakeholder wealth

maximize shareholder wealth

Which of the following legal forms of organization has the ease of dissolution? partnerships sole proprietorships corporations limited partnerships

sole proprietorships

Finance is the system of verifying, analyzing, and recording business transactions the art and science of managing money the art of merchandising product and services the science of production, distribution, and consumption of goods and services

the art and science of managing money

One of the primary tasks of the financial manager is to manage short-term cash needs, which is known as: working capital management capital budgeting capital structure investing

working capital management

The U.S. Congress passed legislation in 2002 that holds corporate managers personally responsible for the firm's financial disclosures and decisions. This law is known as the __________. Sarbanes-Oxley Act Gramm-Rudman-Hollings Act Gramm-Leach-Bliley Act

Sarbanes-Oxley Act

Which of the following is one of the primary questions addressed by financial managers? Which projects should the firm invest resources in to increase shareholder wealth? Which accounting firm should be used to prepare the financial statements? What benefit package should the firm offer in order to attract good employees? What is the impact of an increase in marketing efforts on production?

Which projects should the firm invest resources in to increase shareholder wealth?

One of the most fundamental principles in the field of finance is that money has __________ value. a time an intrinsic a fiat an inherent

a time

f the managers of a company are not the owners of the company, they are considered: agents directors insiders shareholders

agents

When a firm has agency problems the stock price is often depressed which makes the firm:

an attractive takeover candidate. maximize shareholder wealth. issue additional debt.

The process of evaluating long-term investment opportunities for the firm, and then determining which ones the firm should invest in is known as: capital budgeting capital structure hedging working capital management

capital budgeting

Which of the following is an example of agency cost? payment of interest failure of making the best investment decision payment of income tax costs incurred for setting up an agency

failure of making the best investment decision

The science and art of managing money is known as __________. finance personal finance managerial finance

finance

The manager responsible for monitoring and managing the firm's exposure to loss from currency fluctuations is the: foreign exchange manager hedge analyst currency manipulation manager foreign investment analyst

foreign exchange manager

One of the basic premises in finance is that when the risk of an investment is high, the rate of return required by the investor will be: high moderate low equal to short term T-bill rates

high

The market price of a share of stock is determined by: investors buying and selling the stock the New York Stock Exchange the Federal Reserve the chief financial officer and the CEO

investors buying and selling the stock

Which of the following is a strength of a corporation? limited liability less government regulation low taxes low organization costs

limited liability

A limited liability company combines the: limited liability of a corporation with the ownership of a partnership limited liability of a partnership with the ownership of a proprietor tax liability of a corporation with the ownership of a proprietor debt liability of a partnership with the ownership of a proprietor

limited liability of a corporation with the ownership of a partnership

Financial managers should undertake investment opportunities when the __________. marginal benefit is greater than the marginal cost marginal cost is greater than the marginal benefit marginal benefit is at least twice as much as the marginal cost

marginal benefit is greater than the marginal cost

When a manager makes a poor decision that is not in the shareholders' best interest it will be: reflected in the stock price. reported in all the major news outlets. publicly acknowledged.

reflected in the stock price.

The primary goal of the financial manager is to maximize; shareholder wealth societal benefit earnings per share revenue

shareholder wealth

should always engage in ethical behavior should pay bribes to obtain key contracts undertake a cost-benefit analysis of the ethical choice weigh criminal penalties against the corporate benefits

should always engage in ethical behavior

Which of the following forms of organizations is the easiest to form? partnerships sole proprietorships corporations limited partnerships

sole proprietorships

Which of the following positions typically reports to the chief financial officer (CFO)? Controller VP of Marketing VP of Operations Procurement Officer

Controller

Which of the following is an example of an agency cost? Executive stock options Raw materials cost Labor cost Sales commission

Executive stock options

Which of the following is one of the primary functions of the financial manager? Making financing decisions Preparing financial statements Oversight of factory production Calculating payroll deductions

Making financing decisions

A firm's chief accountant that is responsible for all accounting activities is known as the __________. controller treasurer chief financial officer

controller

The set of rules, processes and laws that dictate how a firm is controlled, operated and regulated is known as __________. corporate governance stakeholder theory shareholder wealth maximization

corporate governance

A __________ is a form of business organization that is considered an artificial being and has limited liability. corporation sole proprietorship partnership professional group

corporation

Which of the following is the best measure to ensure that management decisions are in the best interests of the stockholders? tie management pay to the level of dividends per share tie management pay to the performance of the company's common stock price remove management perks fir managers who are inefficient

tie management pay to the performance of the company's common stock price

A disadvantage of a partnership is __________. unlimited liability double taxation limited liability ease of raising funds

unlimited liability

Under which of the following legal forms of organization is ownership readily​ transferable? partnerships sole proprietorships corporations limited partnerships

corporations