Knowledge Check: Chapter 01 An Overview of Financial Management
Which of the following is NOT a main area of finance as taught in universities?
Accounting
If the CEO is accused of questionable behavior, the Board of Directors should
All of these answer choices are correct
B corporations
All of these answer choices are correct.
Double taxation is a major drawback to which form of business organization?
C corporations
Which of the following statements is true?
Finance developed from economics and accounting.
Which of the following is NOT a part of effective corporate governance?
Focus on short-run profits that add up in the long run
Finance does NOT affect decisions in which of the following areas?
None of these answers is correct.
Which of the following statements about managers' compensation is true?
Rewarding managers for stock performance over the long run gives them an incentive to keep the stock price high over time.
Why might stockholders prefer riskier projects than bondholders?
Stockholders do better when the company does better because the stock price is higher.
Kayla is concerned that her division manager may be pushing the development of a new product by ordering her to omit recent negative test results from internal reports. Kayla should`
There is no clear answer but staying quiet may be the worst choice.
A limited liability company (LLC) is
a hybrid between a partnership and a corporation.
Effective communication with stockholders by managers
causes the stock price to remain close to the intrinsic value over time.
Finance is important to individuals because
employees decide how individual retirement funds are invested and how much risk they are willing to assume.
To maximize shareholder wealth, decisions are evaluated
in terms of financial consequences and how they affect society at large.
Stocks are overvalued when
the actual stock price exceeds the intrinsic value of the stock.
Bondholders may demand a higher rate of return when
they believe that a company will pursue risky projects
