Financial Management: Chapter 1 Questions
Agency problems are most associated with?
Corporations
Which one of the following best illustrates that the management of a firm is adhering to the goal of financial management?
An increase in the market value per share
Financial managers should strive to maximize the current value per share of the existing stock to:
Best represent the interests of the current shareholders
Which one of the following questions is a working capital management decision?
How much inventory should be on hand for immediate sale
The decision to issue additional shares of stock is an example of:
A capital structure decision
Which one of the following terms is defined as the management of a firm's long-term investments?
Capital Budgeting
Which one of the following terms is defined as the mixture of a firm's debt and equity financing?
Capital Structure
Which one of the following is an agency cost?
Hiring outside accountants to audit the company's financial statements
Capital structure decisions include determining?
How much debt should be assumed to fund a project
Decisions made by financial managers should primarily focus on increasing the:
Market value per share of outstanding stock
Which one of the following best states the primary goal of financial management?
Maximize the current value per share
Financial managers should primarily focus on the interests of?
Shareholders
Which one of the following parties has ultimate control of corporation?
Shareholders
Working capital management decisions include determining?
The minimum level of cash to be kept in a checking account
An example of a capital budgeting decision is deciding?
Whether or not to purchase a new machine for the production line