Question 1

This subarea of finance helps facilitate the capital flows between investors and companies.
A)investments
B)financial management
C)treasury management
D)financial institutions and markets

Accepted Answer

Financial institutions and markets deal with the intermediaries (such as banks, stock exchanges, and investment companies) through which capital flows between investors and companies.

Question 2

Which of the following personal decisions is NOT impacted by finance?
A)borrowing money to purchase cars or homes
B)making credit card payments
C)making retirement decisions
D)all of these choices are correct.

Accepted Answer

All the options listed (borrowing money for significant purchases, making credit card payments, and making retirement decisions) are financial decisions, indicating that none of these choices are exempt from being impacted by finance.

Question 3

When determining a form of business organization, all of the following are considered EXCEPT
A)who owns the firm.
B)the owners' risks.
C)the tax ramifications.
D)the physical location of the business.

Accepted Answer

The physical location of the business is not typically considered when determining the form of business organization. The other factors, including ownership, risk, and taxes, are important considerations for determining the best choice.

Question 4

This subarea of finance involves methods and techniques to make appropriate decisions about what kinds of securities to own, which firms' securities to buy, and how to be paid back in the form that the investor wishes.
A)real markets
B)investments
C)financial management

Accepted Answer

This subarea of finance is clearly related to investments, as it deals with making decisions about buying securities. Real markets and financial management are broader areas of finance that may include investments, but do not specifically focus on this particular aspect.

Question 5

This type of business organization is entirely legally independent from its owners.
A)sole proprietorship
B)partnership
C)public corporations
D)hybrid organizations

Accepted Answer

Public corporations are legally independent from their owners, as they are owned by shareholders who have limited liability and cannot be held personally responsible for the corporation's debts or legal issues. This is in contrast to sole proprietorships and partnerships, where the owners are personally liable for the business's debts and legal issues. Hybrid organizations may have legal independence, but this can vary depending on the specific type of hybrid organization.

Question 6

Not all cash a company generates will be returned to the investors. Which of the following will NOT reduce the amount of capital returned to the investors?
A)retained earnings
B)taxes
C)dividends

Accepted Answer

Dividends are actually a way of returning capital to investors, not reducing the amount returned. Retained earnings and taxes, on the other hand, are factors that can reduce the amount of capital returned to investors.

Question 7

The increase in oil production in the United States characterizes which of the following key financial concepts presented in this book?
A)the Rule of 72
B)time value of money
C)risk and return
D)capital budgeting

Accepted Answer

Capital budgeting involves analyzing and making decisions regarding long-term investments, such as investments in oil production. The increase in oil production in the United States is an example of a capital budgeting decision made by companies in the oil and gas industry.

Question 8

The practice generally known as double taxation is due to
A)shareholders' dividends being taxed at both the federal and state levels.
B)corporate income being taxed at both the federal and state levels.
C)interest on shareholders' dividends being taxed as income.
D)corporate incomes being taxed at the corporate level, then again at the shareholder level when corporate profits are paid out as dividends.

Accepted Answer

Double taxation occurs when corporate profits are taxed at the corporate level and then again at the shareholder level when those profits are distributed as dividends. This means that shareholders are effectively taxed twice on the same income, hence the term "double taxation".

Question 9

The most commonly accepted groups of asset classes include all of the following except
A)stocks.
B)bonds.
C)machinery and equipment.
D)real estate.

Accepted Answer

The most commonly accepted groups of asset classes are stocks, bonds, real estate, and sometimes commodities. Machinery and equipment are typically considered a subset of real estate or business investments, rather than a separate asset class.

Question 10

Which of the following is the firm's highest-level financial manager?
A)chief executive officer
B)chief financial officer
C)board of directors
D)corporate governance

Accepted Answer

The highest-level financial manager in a firm is typically the chief financial officer (CFO). The CEO is the highest-ranking executive overall, but may not be specifically focused on financial management. The board of directors and corporate governance are not individuals, but rather groups responsible for overseeing management and ensuring effective decision-making and ethical behavior within the company.

Question 11

Which of the following managers would NOT use finance?
A)operational managers
B)marketing managers
C)human resource managers
D)all of these choices are correct.

Accepted Answer

Finance plays an important role in the decision-making process of all managers, including operational, marketing, and human resource managers. They need to understand financial reports, budgets, and investments in order to make informed decisions that maximize the value of the organization. Therefore, all choices are incorrect.

Question 12

This subarea of finance looks at firm decisions in acquiring and utilizing cash received from investors or from retained earnings.
A)investments
B)financial management
C)treasury management

Accepted Answer

Financial management deals with the management of financial resources of the firm, including decisions related to the acquisition and utilization of cash received from investors or retained earnings. Treasury management, on the other hand, focuses on the management of a firm's cash and liquidity position. Investments refer to the allocation of financial resources to various assets or securities. Therefore, the best choice that fits the description is financial management (B).

Question 13

Financial management involves decisions about which of the following?
A)which projects to fund
B)how to minimize taxation
C)what type of capital should be raised
D)all of these choices are correct.

Accepted Answer

Financial management involves making decisions about which projects to fund, how to minimize taxation, and what type of capital should be raised. Therefore, all of these choices are correct.

Question 14

Which of the following is NOT considered a hybrid organization?
A)S corporation
B)limited liability partnership
C)limited liability company
D)limited partnership
E)all of these choices are correct.

Accepted Answer

The answer of Which of the following is NOT considered...

Question 15

This type of business organization is relatively easy to start, and it is subject to much lighter regulatory and paperwork burden than other business forms.
A)sole proprietorship
B)partnership
C)corporation
D)hybrid organization

Accepted Answer

A sole proprietorship is the best choice because it is relatively easy to start and has a lighter regulatory and paperwork burden compared to partnerships and corporations. Hybrid organizations may also have additional regulatory requirements and paperwork burden.

Question 16

Which of the following is not an impact of the slowdown occurring in China's economy?
A)lower demand in materials such as steel, iron ore, and copper
B)real estate market declining in Sydney, Australia
C)money going out of Manhattan, New York
D)falling community prices

Accepted Answer

A slowdown in China's economy would not directly cause money to leave Manhattan, New York. The other options are related to China's reduced demand for commodities and its global economic influence.

Question 17

This is a general term for securities like stocks, bonds, and other assets that represent ownership in a cash flow.
A)investment
B)financial asset
C)real asset
D)financial markets

Accepted Answer

Financial assets are investments that represent ownership in a cash flow. This includes stocks, bonds, mutual funds, exchange-traded funds, and other securities. Real assets, on the other hand, represent physical assets such as real estate, commodities, and natural resources. Financial markets are the venues where financial assets are traded. Investment is a broader term that encompasses various types of assets, including financial and real assets.

Question 18

This subarea of finance is important for adapting to the global economy.
A)investments
B)financial management
C)international finance
D)financial institutions and markets

Accepted Answer

International finance is the subarea of finance that deals with financial transactions between countries or multinational corporations. Adaptation to the global economy requires an understanding of international finance, including the exchange rates, international trade, and cross-border investment strategies.

Question 19

Which of the following is defined as a group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same laws and regulations?
A)investments
B)asset classes
C)market instruments
D)financial markets

Accepted Answer

Asset classes are defined as a group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same laws and regulations. Examples of asset classes include stocks, bonds, real estate, and commodities. Investments refer to any type of asset that is purchased with the expectation of generating a financial return, which could include securities from different asset classes. Market instruments and financial markets are broader terms that encompass all types of securities and markets, including those that may not exhibit similar characteristics or be subject to the same laws and regulations.

Question 20

A potential future negative impact to value and/or cash flows is often discussed in terms of probability of loss and the expected magnitude of the loss. This is called
A)options.
B)standard deviation.
C)coefficient of variation.
D)risk.

Accepted Answer

The concept of probability of loss and expected magnitude of the loss relates directly to risk. Options, standard deviation, and coefficient of variation are all tools used to analyze and manage risk, but they are not the definition of risk itself. Therefore, the best choice is D, risk.

Quiz 1: Introduction to Financial Management

This subarea of finance helps facilitate the capital flows between investors and companies.

Which of the following personal decisions is NOT impacted by finance?

When determining a form of business organization, all of the following are considered EXCEPT

This subarea of finance involves methods and techniques to make appropriate decisions about what kinds of securities to own, which firms' securities to buy, and how to be paid back in the form that the investor wishes.

This type of business organization is entirely legally independent from its owners.

Not all cash a company generates will be returned to the investors. Which of the following will NOT reduce the amount of capital returned to the investors?

The increase in oil production in the United States characterizes which of the following key financial concepts presented in this book?

The practice generally known as double taxation is due to

The most commonly accepted groups of asset classes include all of the following except

Which of the following is the firm's highest-level financial manager?

Which of the following managers would NOT use finance?

This subarea of finance looks at firm decisions in acquiring and utilizing cash received from investors or from retained earnings.

Financial management involves decisions about which of the following?

Which of the following is NOT considered a hybrid organization?

This type of business organization is relatively easy to start, and it is subject to much lighter regulatory and paperwork burden than other business forms.

Which of the following is not an impact of the slowdown occurring in China's economy?

This is a general term for securities like stocks, bonds, and other assets that represent ownership in a cash flow.

This subarea of finance is important for adapting to the global economy.

Which of the following is defined as a group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same laws and regulations?

A potential future negative impact to value and/or cash flows is often discussed in terms of probability of loss and the expected magnitude of the loss. This is called