Tuesday, January 11, 2011

Mcqs on Introduction to business finance

Question 1.
__________ is concerned with the acquisition, financing, and management of assets with some overall goal in mind.

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Financial management End of Question 1

Question 2.
Jensen and Meckling showed that __________ can assure themselves that the __________ will make optimal decisions only if appropriate incentives are given and only if the __________ are monitored.

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End of Question 2

Question 3.
__________ is concerned with the maximization of a firm's earnings after taxes.

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Profit maximization

Question 4.
What is the most appropriate goal of the firm?

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Shareholder wealth maximization. End of Question 4

Question 5.
Which of the following statements is correct regarding profit maximization as the primary goal of the firm?

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End of Question 5
Profit maximization is concerned more with maximizing net income than the stock price.

Question 6.
__________ is concerned with the branch of economics relating the behavior of principals and their agents.

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Agency theory End of Question 6

Question 7.
A concept that implies that the firm should consider issues such as protecting the consumer, paying fair wages, maintaining fair hiring practices, supporting education, and considering environmental issues.

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Social responsibility End of Question 7

Question 8.
Which of the following is not normally a responsibility of the treasurer of the modern corporation but rather the controller?

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Budgets and forecasts End of Question 8

Question 9.
The __________ decision involves determining the appropriate make-up of the right-hand side of the balance sheet.

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financing End of Question 9

Question 10.
To whom does the Treasurer most likely report?

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Chief Financial Officer. End of Question 10

Question 11.

The authors of your textbook suggest that you need to understand financial management even if you have no intention of becoming a financial manager. One reason is that the successful manager of the not-too-distant future will need to be much more of a __________ who has the knowledge and ability to move not just vertically within an organization but horizontally as well. Developing __________ will be the rule, not the exception.

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team player; cross-functional capabilities End of Question 11

Question 12.
The __________ decision involves a determination of the total amount of assets needed, the composition of the assets, and whether any assets need to be reduced, eliminated, or replaced.

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investment End of Question 12

Question 13.
How are earnings per share calculated?

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End of Question 13

Use the income statement to determine earnings after taxes (net income) and divide by the number of common shares outstanding.

Question 14.
According to the text's authors, what is the most important of the three financial management decisions?

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Investment decision. End of Question 14

Question 15.
The __________ decision involves efficiently managing the assets on the balance sheet on a day-to-day basis, especially current assets.

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asset management End of Question 15

Question 16.
Which of the following is not a perquisite (perk)?

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Salary. End of Question 16

Question 17.
Which of the following is not normally a responsibility of the controller of the modern corporation?

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Asset management End of Question 17

Question 18.
All constituencies with a stake in the fortunes of the company are known as __________.

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stakeholders End of Question 18

Question 19.
Which of the following statements is not correct regarding earnings per share (EPS) maximization as the primary goal of the firm?

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EPS maximization is concerned with maximizing net income. End of Question 19

Question 20.
__________ is concerned with the maximization of a firm's stock price.

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Shareholder wealth maximization End of Question 20

Question 21.
Corporate governance success includes three key groups. Which of the following represents these three groups?

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Board of Directors, executive officers, and common shareholders.


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