Question 1

Which one of the following best matches the primary goal of financial management?

Accepted Answer

A)  increasing the dollar amount of each sale
B)  increasing traffic flow within the firm's stores
C)  transforming fixed costs into variable costs
D)  increasing the firm's liquidity
E)  increasing the market value of the firmF) A) and E)
G) A) and D)

Question 2

Which of the following is an example of a secondary market transaction?

Accepted Answer

A)  ANZ bank issues new shares to a large funds manager in a private placement.
B)  The Government issues new long term bonds.
C)  Mary sells 1000 Qantas shares through her broker.
D)  BHP issues new bonds which will mature in ten years.
E)  None of these are secondary market transactions.F) A) and C)
G) A) and B)

Question 3

Todd and Cathy created a firm that is a separate legal entity and will share ownership of that firm on a 50/50 basis.Which type of entity did they create if they have no personal liability for the firm's debts?

Accepted Answer

A)  limited partnership
B)  corporation
C)  sole proprietorship
D)  general partnership
E)  public companyF) A) and E)
G) B) and E)

Question 4

The management of a firm's cash,inventory,and payables is referred to as:

Accepted Answer

A)  cash-flow forecasting
B)  asset management
C)  capital management
D)  cash budgeting
E)  working capital managementF) A) and B)
G) A) and E)

Question 5

The person responsible for managing a firm's cash flow,credits and CAPEX (capital expenditure) is called:

Accepted Answer

A)  a broker
B)  a stakeholder
C)  a chief accountant
D)  a controller
E)  a treasurerF) C) and D)
G) B) and C)

Question 6

A primary financial market is:

Accepted Answer

A)  one that involves the sale of existing securities
B)  one that offers securities with the highest expected return
C)  one that offers the greatest choice of shares and debentures
D)  one that offers only securities with the highest historical return
E)  one that involves the sale of securities for the first timeF) A) and D)
G) A) and B)

Question 7

Which of the following are effective means of aligning management goals with shareholder interests?
I.employee share options
II.threat of a takeover
III.management bonuses tied to performance goals
IV.threat of a proxy fight

Accepted Answer

A)  I and III only
B)  II and IV only
C)  I,II and III only
D)  I,III and IV only
E)  I,II,III and IVF) A) and C)
G) A) and B)

Question 8

The potential conflict of interest between a firm's owners and its managers is referred to as which type of conflict?

Accepted Answer

A)  organisational
B)  structural
C)  formation
D)  agency
E)  territorialF) A) and C)
G) A) and B)

Question 9

Bruce is a security analyst working for Goldman Sachs JB Were.His job falls into which of the following areas of finance?

Accepted Answer

A)  international finance
B)  financial institutions
C)  corporate finance
D)  capital management
E)  investmentsF) A) and C)
G) C) and D)

Question 10

Which one of the following is a capital structure decision?

Accepted Answer

A)  determining the optimal inventory level
B)  establishing the preferred debt-equity level
C)  selecting new equipment to purchase
D)  setting the terms of sale for credit sales
E)  determining when suppliers should be paidF) A) and B)
G) C) and E)

Question 11

A corporation:

Accepted Answer

A)  is ultimately controlled by its board of directors
B)  is a legal entity separate from its owners
C)  is prohibited from entering into contractual agreements
D)  has its identity defined by its bylaws
E)  has its existence regulated by the rules set forth in its charterF) All of the above
G) B) and C)

Question 12

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

Accepted Answer

A)  increasing employee retirement benefits
B)  compensating managers with shares that must be held for 3 years before the shares can be sold
C)  allowing a manager to decorate his or her own office once he or she has been in that office for a period of 3 years or more
D)  increasing the number of paid holidays that long-term employees are entitled to receive
E)  allowing employees to retire early with full retirement benefitsF) A) and B)
G) A) and C)

Question 13

Which one of the following applies to a general partnership?

Accepted Answer

A)  The firm's operations must be controlled by a single partner.
B)  Any one of the partners can be held solely liable for all of the partnership's debt.
C)  The profits of the firm are taxed as a separate entity.
D)  Each partner's liability for the firm's debts is limited to each partner's investment in the firm.
E)  The profits of a general partnership are taxed the same as those of a corporation.F) A) and B)
G) A) and C)

Question 14

Any situation where a conflict may arise between the firm's owners and its
Managers is referred to as a(n) :

Accepted Answer

A)  organisational problem
B)  personnel conflict
C)  agency problem
D)  control issue
E)  compensation issueF) C) and D)
G) B) and C)

Question 15

Elizabeth is employed as a loans officer for the Commonwealth Bank.Her job falls into which of the following areas of finance?

Accepted Answer

A)  international finance
B)  financial institutions
C)  corporate finance
D)  capital management
E)  investmentsF) C) and D)
G) A) and B)

Question 16

In a general partnership,each partner is personally liable for:

Accepted Answer

A)  the partnership debts that he or she created
B)  his or her proportionate share of all partnership debts regardless of which partner incurred that debt
C)  the total debts of the partnership,even if he or she was unaware of those debts
D)  the debts of the partnership up to the amount he or she invested in the firm
E)  all personal and partnership debts incurred by any partner,even if he or she was unaware of those debtsF) B) and C)
G) A) and B)

Question 17

A negotiated sale of securities by an issuer to a specific buyer is called a(n) :

Accepted Answer

A)  public offering
B)  secondary placement
C)  specialised sale
D)  independent placement
E)  private placementF) All of the above
G) B) and E)

Question 18

Financial institutions are:

Accepted Answer

A)  institutions that primarily invest in real estate
B)  institutions that primarily deal in financial matters
C)  institutions that deal in second-hand equipment
D)  institutions that engage in manufacturing
E)  None of theseF) C) and E)
G) B) and C)

Question 19

Which of the following individuals commonly use finance in the course of their job?
I.chief financial officers
II.accountants
III.security analysts
IV.strategic managers

Accepted Answer

A)  I and II only
B)  III and IV only
C)  I and III only
D)  I,II and III only
E)  I,II III,and IVF) B) and C)
G) A) and E)

Question 20

Which of the following are advantages of the corporate form of organisation?
I.ability to raise large sums of equity capital
II.ease of ownership transfer
III.both profits and dividends are taxed
IV.limited liability for all owners

Accepted Answer

A)  I and II only
B)  III and IV only
C)  II,III and IV only
D)  I,II and IV only
E)  I,II,III and IVF) All of the above
G) A) and D)

Exam 1: Introduction to Financial Management

The management of a firm's cash,inventory,and payables is referred to as:

Correct AnswerverifiedShow Answer

Which of the following is an example of a secondary market transaction?

Correct AnswerverifiedShow Answer

Which one of the following applies to a general partnership?

Correct AnswerverifiedShow Answer

Which one of the following is a capital structure decision?

Correct AnswerverifiedShow Answer

Elizabeth is employed as a loans officer for the Commonwealth Bank.Her job falls into which of the following areas of finance?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following individuals commonly use finance in the course of their job? I.chief financial officers II.accountants III.security analysts IV.strategic managers

Correct AnswerverifiedShow Answer

A negotiated sale of securities by an issuer to a specific buyer is called a(n) :

Correct AnswerverifiedShow Answer

A primary financial market is:

Correct AnswerverifiedShow Answer

The potential conflict of interest between a firm's owners and its managers is referred to as which type of conflict?

Correct AnswerverifiedShow Answer

Any situation where a conflict may arise between the firm's owners and its Managers is referred to as a(n) :

Correct AnswerverifiedShow Answer

Financial institutions are:

Correct AnswerverifiedShow Answer

A corporation:

Correct AnswerverifiedShow Answer

Which of the following are effective means of aligning management goals with shareholder interests? I.employee share options II.threat of a takeover III.management bonuses tied to performance goals IV.threat of a proxy fight

Correct AnswerverifiedShow Answer

Which one of the following best matches the primary goal of financial management?

Correct AnswerverifiedShow Answer

In a general partnership,each partner is personally liable for:

Correct AnswerverifiedShow Answer

The person responsible for managing a firm's cash flow,credits and CAPEX (capital expenditure) is called:

Correct AnswerverifiedShow Answer

Which of the following are advantages of the corporate form of organisation? I.ability to raise large sums of equity capital II.ease of ownership transfer III.both profits and dividends are taxed IV.limited liability for all owners

Correct AnswerverifiedShow Answer

Todd and Cathy created a firm that is a separate legal entity and will share ownership of that firm on a 50/50 basis.Which type of entity did they create if they have no personal liability for the firm's debts?

Correct AnswerverifiedShow Answer

Bruce is a security analyst working for Goldman Sachs JB Were.His job falls into which of the following areas of finance?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified