Test-Bank-for-Contemporary-Financial-Management-14th-Edition-by-Moyer PDF

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Test Bank for Contemporary Financial Management 14th Edition by Moyer Full file at https://TestbankDirect.eu/ Name:

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Chapter01:TheRoleandObjectiveofFinancialManagement MultipleChoice 1.Theprimaryobjectiveofthefirmis_______. a.shareholderwealthmaximization b.socialresponsibility c.long-runsurvival d.profitmaximization ANSWER:a 2.Theshareholderwealthmaximizationgoalstatesthatmanagementshouldseektomaximizethe____oftheexpected futurereturnstotheownersofthefirm. a.futurevalue b.compoundvalue c.percentagevalue d.presentvalue ANSWER:d 3.Financialmanagerscantakeavarietyofactionstoinfluencethemarketvalueofacompany'sstock.Allofthe followingareclassificationsofactionstakenEXCEPT_____decisions. a.investing b.financing c.dividend d.taximplication ANSWER:d 4.Shareholderwealthismeasuredbythe____valueoftheshareholders'commonstockholdings. a.book b.market c.historic d.compound ANSWER:b 5.Thelimitationsoftheprofitmaximizationgoalincludewhichofthefollowing? a.Itlacksatimedimension(i.e.,itisstatic). b.Itfailstoconsiderriskwithalternativedecisions. c.Thedefinitionofprofitisambiguous. d.Alltheabovearelimitations. ANSWER:d

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Chapter01:TheRoleandObjectiveofFinancialManagement 6.Theobjectiveofmaximizingshareholderwealth,asmeasuredbythemarketvalueofthefirm'sstock,_____. a.doesnotconsiderthetimingofthebenefitsreceived b.providesawaytoconsidertheriskofthebenefitsexpected c.benefitsonlycertainstockholders d.doesnotprovideastandardagainstwhichtojudgeactualdecisions ANSWER:b 7.Thetwomostimportantdisciplinesonwhichfinancialmanagementreliesare_____. a.accountingandproduction b.accountingandmarketing c.economicsandmarketing d.accountingandeconomics ANSWER:d 8.WhichofthefollowingisNOTaprofessionalcertificationforcareersinthefieldoffinance? a.CertifiedFinancialManager(CFM) b.CertifiedFinancialPlanner(CFP) c.CertifiedFinancialAnalyst(CFA) d.CertifiedTreasuryProfessional(CTP) ANSWER:c 9.Whenconsideringtheriskofreceivingcashflows,financialmanagersmustbeawarethatinvestors_____. a.wanthigherreturnsforperceivedgreaterrisk b.wantalowervaluedfirmtodiscouragefutureinvestorswhichmightdilutetheirexistingcontrol c.expectdividendsandcapitalgainsregardlessoftherisksassociatedwithachievingthem d.alwayswantlowerreturnssothattheriskisminimized ANSWER:a 10.Amajoradvantageofusingthemaximizationofshareholderwealthastheprimarygoalofthefirmisthatthisgoal considers_____. a.thetimingandtheriskoftheexpectedbenefitstobereceived b.theinvestor'sconsumptionutility c.thevalueofcloselyheldpartnerships d.Allofthesearecorrect ANSWER:a

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Chapter01:TheRoleandObjectiveofFinancialManagement 11.Theprimaryreasonforthedivergencebetweentheshareholderwealthmaximizationgoalandtheactualgoals pursuedbymanagementhasbeenattributedto_____. a.separationofsocialresponsibilityandstakeholders'concerns b.separationofownershipandcontrol c.separationofpersonalwelfareandlong-runprofitgoals d.thegrantingof"goldenparachute"contracts ANSWER:b 12.Givingtopmanagement____isonemethodthatensuresmanagerswillactintheinterestofshareholdersinmerger decisions. a."goldenparachute"contracts b.excellentpay c.executiveperks d.jobsecurity ANSWER:a 13.____arisefromthedivergentobjectivesbetweenownersandmanagers. a.Shareholderrelationships b.Stakeholderproblems c.Creditorproblems d.Agencyproblems ANSWER:d 14.Agencycostsincludeallofthefollowing,EXCEPT_____. a.expenditurestomonitormanagement'sactions b.providingstockaspartofmanagement'scompensationexpenditurestostructuretheorganization c.flotationcosts d.bondingexpenditures ANSWER:c 15.Apotentialagencyconflictcanarisebetweenstockholdersandcreditorsbecauseownersmay_____. a.increasetheriskofafirm'sinvestments b.decreasetheamountofdebtoutstanding c.decreasetheriskofafirm'sinvestments d.increasethefirm'snetworth ANSWER:a

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Chapter01:TheRoleandObjectiveofFinancialManagement 16.Creditorshaveafixedfinancialclaimonacompany'sresourcesthroughallofthefollowingEXCEPT_____. a.longtermdebt b.bankloans c.preferredstock d.commercialpaper ANSWER:c 17.Agencyproblemsmaygiverisetoconstraintsthat____themarketvalueoffirms. a.increase b.decrease c.donotaffect d.arenotimportantto ANSWER:b 18.AllofthefollowingareproblemswiththemicroeconomicprofitmaximizationmodelEXCEPT_____. a.theabsenceofatimedimension b.offersfinancialmanagersinsightstoawiderangeofproblems c.doesnotconsidertheriskofalternativedecisions d.theproblemofdefiningprofits ANSWER:b 19.____arelargelyoutsideofthedirectcontrolofmanagers. a.Investmentstrategies b.Economicenvironmentfactors c.Majorpolicydecisions d.Dividendpolicies ANSWER:b 20.Thesuccessofafirmislinkedtoitsstakeholders.Thisgroupincludes_____. a.communitiesinwhichtheyoperate b.suppliers c.employees d.Allofthesearecorrect ANSWER:d

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Chapter01:TheRoleandObjectiveofFinancialManagement 21.TechniquesidentifiedbyJohnCaseythatmanagerscouldkeepinmindwhenaddressingtheethicaldimensionsofa businessproblemincludeallofthefollowingEXCEPT_____. a.collectingallthefactsbearingontheproblem b.clarifyingtheparametersoftheproblem c.involvingallpartieswithafinancialinterestintheoutcome d.seekingequityforthosewhomaybeaffected ANSWER:c 22.Manyentrepreneursare____diversifiedwithrespecttotheirpersonalwealth. a.poorly b.highly c.well d.90% ANSWER:a 23.____dealswitheconomicdecisionsofindividuals,households,andfirms. a.Economicaccounting b.Microeconomics c.BlueChipeconometrics d.Macroeconomics ANSWER:b 24.Financialmanagementdrawsheavilyonthefollowingrelateddisciplines: a.accounting b.macroeconomics c.microeconomics d.Allofthesedisciplinesareapplicable ANSWER:d 25.Thechieffinancialofficer(CFO)normallyhasresponsibilityforallofthefollowingEXCEPT_____. a.advertisingstrategy b.managinginterestraterisk c.tradingforeigncurrencies d.accountingfunctions ANSWER:a

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Chapter01:TheRoleandObjectiveofFinancialManagement 26.Thecontrollernormallyhasresponsibilityforall____relatedactivities,whilethetreasurerisnormallyconcernedwit ____. a.acquisition;dataprocessing b.tax;costaccounting c.tax;financialaccounting d.accounting;expenditureoffunds ANSWER:d 27.Pertheshareholderwealthmaximizationgoal,managementshouldseektomaximizethe____ofthe____to owners. a.presentvalue;expectedpretaxcashflows b.futurevalue;expectedpretaxcashflows c.presentvalue;expectedfuturereturns d.futurevalue;expectedfuturereturns ANSWER:c 28.Shareholderwealthismeasuredbythe____. a.bookvalueoftheshareholders'commonstockholdings b.marketvalueoftheshareholders'commonstockholdings c.bookvalueofthecompany'sassets d.marketvalueofthecompany'sassets ANSWER:b 29.Amongthemostimportantagencyrelationshipsinthecontextoffinanceis(are)therelationship(s)between____. a.stockholdersandcreditors b.managementandworkers c.stockholdersandcreditors,andmanagementandworkers d.managementandcreditors ANSWER:a 30.Protectivecovenantsinacompany'sbondindenturesareusedinagencyrelationshipsinvolving____. a.stockholdersandmanagers b.stockholdersandcreditors c.managementandworkers d.managementandcreditors ANSWER:b

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Chapter01:TheRoleandObjectiveofFinancialManagement 31.Thechieffinancialofficer(CFO)ofacorporationnormallyreportstothe____ofthecompany. a.chairmanoftheboardofdirectors b.chiefoperatingofficer c.controller d.chiefexecutiveofficer ANSWER:d 32.The____hasagoalofservingasabridgebetweenacademicstudyoffinanceandtheapplicationoffinancial principlesbyfinancialmanagers. a.FinancialExecutivesInstitute b.FinancialManagementAssociation c.AmericanFinanceAssociation d.InstitutionofFinancialAnalysts ANSWER:b 33.AllofthefollowingeconomicenvironmentfactorsaffectstockpricesEXCEPT_____. a.investmentstrategies b.competition c.taxrates d.currencyexchangerates ANSWER:a 34.Themajorfactorsthatdeterminethemarketvalueofacompany'ssharesofstockincludeallofthefollowing EXCEPT____. a.riskofitscashflows b.timingofitscashflows c.bookvalueofitsassets d.riskofitscashflowsandthetimingofitscashflows ANSWER:c 35.Thereisoftenadivergencebetweentheshareholderwealthmaximizationgoalandtheactualgoalspursuedby management.Theprimaryreasonforthisis____. a.geographicaldispersionofshareholders b.separationofownershipandcontrol c.agedifferencesbetweenmanagersandshareholders d.thatbothhavetheirownagendas ANSWER:b

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Chapter01:TheRoleandObjectiveofFinancialManagement 36.Theexistenceofdivergentobjectivesbetweenownersandmanagersisoneexampleofaclassofproblemsarising from____. a.socialresponsibilityconcerns b.agedifferencesbetweenmanagersandowners c.agencyrelationships d.union-managementrelations ANSWER:c 37.TheactivitiesofthetreasurerincludeallofthefollowingEXCEPT_____. a.financialplanning b.taxpreparation c.creditanalysis d.pensionfundmanagement ANSWER:b 38.Themostimportantobjectiveofthefirmisto_____. a.makeMC=MR b.maximizeprofits c.minimizeagencycosts d.Noneofthesearecorrect ANSWER:d 39.Firmsnormallyrecognizeresponsibilitiestovariousconstituencies,suchaseachofthefollowingEXCEPT_____. a.Tosustainanoptimumreturnoninvestmentforstockholders b.Tobeperceivedbycustomersasaproviderofqualityservice c.Todemonstratethatinvestorsarethefirm'smostvaluableresource d.Toprovidecorporateleadershipinthecommunitiesitserves ANSWER:c 40.Onemethodofdecreasingthecashoutflowsofafirmisto_____. a.decreasedepreciation b.increasecapitalexpenditures c.decreasedividends d.increasedebtrepayment ANSWER:c

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Chapter01:TheRoleandObjectiveofFinancialManagement 41.Accountingisconcernedprimarilywithmatching_____. a.cost-basedrevenuesandexpenses b.taxliabilityandfuturecashflows c.revenueandlong-termdebt d.inventoryandcostofsales ANSWER:a 42.Thebottom-lineearningsfigurefromtheaccountingsystemismisleadingbecause_____. a.itdoesnotreflectactualcashinflowsandoutflowsofthefirm b.stockdividendsaredifficulttoforecast c.depreciationisacashoutlaybutisnotreflectedassuch d.taxlawschangeregularlywhichcausethefirmtomisjudgeitstruetaxobligation ANSWER:a 43.Theaccountant'sroleinthefirmistodoallofthefollowingEXCEPT_____. a.preparefinancialstatements b.determinethefeasibilityofcertaininvestmentdecisions c.determinethetaxliabilityofthefirm d.keeprecordsofthefirm'sperformance ANSWER:b 44.Thefinancialmanageruses____whendeterminingthefirm'smostappropriatecapitalstructure. a.accountingdata b.employmentbenefitdata c.federalregulations d.computersoftwaredesign ANSWER:a 45.Thenetpresentvalueruleprovidesappropriateguidanceforfinancialdecisionmakerswhencostsareincurred immediatelybut_____. a.futurecashflowsarenotknownwithcertainty b.marginalcostsareequaltomarginalrevenue c.resultinastreamofbenefitsoverseveralfuturetimeperiods d.marginalcostsaregreaterthanmarginalrevenue ANSWER:c

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Chapter01:TheRoleandObjectiveofFinancialManagement 46.CorporateofficersnormallyincludeallthefollowingEXCEPT_____. a.Secretary b.Chiefoperatingofficer c.Treasurer d.Financialanalyst ANSWER:d 47.Thedifferencebetweenafirm'sannualafter-taxoperatingprofitanditstotalannualcostofcapitalisknownas _____. a.earnedincome b.EconomicValueAdded c.ManagerialValueAdded d.operatingincome ANSWER:b 48.____equalsthenumberofsharesoutstandingtimesthemarketpricepershare. a.Bookvalue b.Stakeholderswealth c.Totalshareholderwealth d.Economicvalue ANSWER:c 49.Concernfortheinterestsofthestakeholderscanbeviewedasthemeanstotheendof_____. a.maximizinglong-termshareholderwealth b.diminishingmarginalreturn c.maximizingrisk d.continuinglegallitigation ANSWER:a 50.Thenetpresentvalueofaninvestmentmadebyafirmrepresentsthecontributionofthatinvestmenttothe____of thefirm. a.bookvalue b.profit c.value d.cashflow ANSWER:c

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Chapter01:TheRoleandObjectiveofFinancialManagement 51.Amajoradvantageofthecorporateformofbusinessoverbothsoleproprietorshipsandpartnershipsisthe_____. a.limitedliability b.reductionintaxes c.easeofformation d.abilitytomaintainownership ANSWER:a 52.Anadvantagethatthecorporateformofbusinesshasovereitherthesoleproprietorshiporpartnershipisthe_____. a.abilitytoraisecapital b.easeofchangingownership c.limitedliability d.Allofthesearecorrect ANSWER:d 53.Amajordisadvantageofasoleproprietorshipisthefactthat_____. a.itisexpensivetoestablish b.theownerhasunlimitedpersonalliability c.itiseasytofinancegrowth d.theownerpaystaxesonalltheincome ANSWER:b 54.Inalimitedpartnership,thelimitedpartnersmaylimittheir_____. a.taxliability b.liability c.taxwrite-off d.abilitytoattractnewproducts ANSWER:b 55.Corporatesecuritiesrepresentclaimsagainstthe_____. a.corporateofficersofthefirm b.agentsofthecorporation c.liabilitiesandnetworthofthefirm d.assetsandfutureearningsofthefirm ANSWER:d

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Chapter01:TheRoleandObjectiveofFinancialManagement 56.____is(are)referredtoasaresidualformofownershipinacorporation. a.Commonstock b.Preferredstock c.Bonds d.Dividends ANSWER:a 57.Theadvantagesofthecorporateformoforganizationoverbothsoleproprietorshipsandpartnershipsinclude____. a.limitedliabilityandlowertaxrates b.permanencyandlowertaxrates c.limitedliabilityandpermanency d.lowertaxratesandpermanency ANSWER:c 58.Althoughthistypeofbusinessgenerates4.1%ofthetotalU.S.businessrevenue,____makeupapproximately72% ofallbusinesses. a.generalpartnerships b.corporations c.limitedpartnerships d.sole-proprietorships ANSWER:d 59.AllofthefollowingareadvantagesofthecorporateformofbusinessorganizationEXCEPT_____. a.permanentlegalexistence b.unlimitedliability c.flexibilityinownershipchange d.abilitytoraisecapital ANSWER:b 60.Thereareproblemswithusingthe“profitmaximization”criterion.Whichofthefollowingis(are)correct? I.Profitmaximizationhasanambiguousdefinitionof“maximizingprofits.” II.Profitmaximizationfailstoconsidertherisksassociatedwithalternativedecisions. a.OnlystatementIiscorrect b.OnlystatementIIiscorrect c.BothstatementsIandIIarecorrect d.NeitherstatementInorIIiscorrect ANSWER:c

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Chapter01:TheRoleandObjectiveofFinancialManagement 61.Whichofthefollowingstatementsis(are)correct? I.ShareholderselecttheChairmanoftheBoard. II.Theboardofdirectorshasnocontroloverwhetherdividendswillbepaid. a.OnlystatementIiscorrect b.OnlystatementIIiscorrect c.BothstatementsIandIIarecorrect d.NeitherstatementInorIIiscorrect ANSWER:d 62.Therearethreemajorfactorsthatdeterminethemarketvalueofacompany’sshareofstock.Allofthefollowingare factorsEXCEPT_____. a.amountofcashflowsexpected b.salesgenerated c.timingofcashflows d.risktakentogeneratecashflows ANSWER:b 63.Amicroeconomicconceptusedinfinancialmanagementis_____. a.fullutilizationofdataprocessing b.settingmarginalcostsequaltomarginalrevenues c.accrualbasisofrecognizingrevenuesandexpenses d.targetcapitalstructure ANSWER:b 64.AllofthefollowingareresponsibilitiesofacontrollerEXCEPT__...