Chapter 1

Jenna has been promoted and is now in charge of all external financing. In other words, she is in charge of:

capital structure management.

The goal of financial management is to increase the:

current market value per share.

The primary goal of financial management is most associated with increasing the:

market value of the firm.

Which one of the following is a capital structure decision?

Establishing the preferred debt-equity level

Which one of the following situations is most apt to create an agency conflict?

Basing management bonuses on the length of employment

Which one of the following is most apt to align management's priorities with shareholders' interests?

Compensating managers with shares of stock that must be held for a minimum of three years

Which one of the following occupations best fits into the corporate area of finance?

Chief financial officer

Jamie is employed as a currency trader in the Japanese yen market. Her job falls into which one of the following areas of finance?

International Finance

Capital budgeting includes the evaluation of which of the following?

Size, timing, and risk of future cash flows

An agency issue is most apt to develop when:

the control of a firm is separated from the firm's ownership.