Chapter 1: In-Class Quiz

Question 1

Basic areas of finance do not include international finance. T/F

Answer 1

False

Question 2

Working Capital decisions are different than decisions regarding Capital Structure. T/F

Answer 2

True

Question 3

Sole Proprietors have limited liability. T/F

Answer 3

False

Question 4

Maximize the market value of the existing owners’ equity. T/F

Answer 4

True

Question 5

There can be conflicts of interest between in an agency relationship. T/F

Answer 5

True

Question 6

The basic areas of finance are:
1.Corporate finance = Business finance
2.Investments
3.Financial institutions
4.International finance
T/F

Answer 6

True

Question 7

Which of the following has unlimited liability?
A) Partnership
B) LLC
C) Corporation
D) Sole Proprietor

Answer 7

D) Sole Proprietor

Question 8

Which of the following is not considered a financial decision?
A) Working Capital
B) Capital Structure
C) Creating a new market campaign
D) Capital Budgeting

Answer 8

C) Creating a new market campaign

Question 9

Which of the following is considered a goal of financial management?
A) Maximize market share
B) Maximize the current value per share of the company’s existing stock
C) Minimizing costs
D) Maximizing Profits

Answer 9

B) Maximize the current value per share of the company’s existing stock

Question 10

Every step should be taken to maximize shareholder value: T/F

Answer 10

False

Question 11

Stockholders (principals) hire managers (agents) to run the company. T/F

Answer 11

True