Question 1

The financial planning process begins with which of the following?

Accepted Answer

A)   budgeting
B)   expert systems
C)   financial forecasts
D)   brainstormingE) B) and D)
F) B) and C)

Question 2

Which of the following is a type of loan often used to finance buildup of inventory for seasonal (cyclical) businesses just before their strongest sales period?

Accepted Answer

A)   a collateral loan
B)   an unsecured bank loan
C)   trade credit
D)   a secured bank loanE) A) and C)
F) All of the above

Question 3

Financial managers are best described by which of the following?

Accepted Answer

A)   They focus on profit maximization.
B)   They track how money is flowing into and out of the company.
C)   They play such an important organizational role that they often are called operations managers.
D)   They are not typically involved in long-term strategic planning.E) A) and B)
F) A) and C)

Question 4

Lines of credit are short-term loans that are secured by collateral.

Accepted Answer

A) True 
 B)False

Question 5

Funds invested in long-lived assets,such as land,buildings,machinery,and equipment,are called which of the following?

Accepted Answer

A)   operating expenses
B)   production costs
C)   manufacturing expenses
D)   capital expendituresE) B) and C)
F) None of the above

Question 6

List three common reasons that companies make capital expenditures.

Accepted Answer

to expand,to replace...

Question 7

A short-term forecast is also called an operating plan.

Accepted Answer

A) True 
 B)False

Question 8

The three most popular types of marketable securities are Treasury bills,certificates of deposit,and which of the following?

Accepted Answer

A)   money market funds
B)   corporate bonds
C)   Treasury notes
D)   commercial paperE) A) and D)
F) C) and D)

Question 9

The major disadvantage of debt financing is the inability to deduct interest expenses for income tax purposes.

Accepted Answer

A) True 
 B)False

Question 10

The concept of risk-return trade-off is best described by which of the following?

Accepted Answer

A)   It is important only at the lowest management levels.
B)   It relates to higher risk requiring greater return.
C)   It will be more likely to influence the financial activities in an international company than a national one.
D)   It will be more likely to influence the financial activities in a service provider than a manufacturer.E) A) and B)
F) A) and D)

Question 11

Trade credit is credit extended to the buyer by the seller.It is entered in the buyer's books as an account receivable.

Accepted Answer

A) True 
 B)False

Question 12

In finance,the opportunity for a profit is called return.

Accepted Answer

A) True 
 B)False

Question 13

Long-term debt would be used to finance which of the following activities?

Accepted Answer

A)   to replace broken glass in a window
B)   to buy new tablecloths for a restaurant
C)   to provide customer with a cash discount
D)   to pay for a few pieces of equipmentE) C) and D)
F) B) and C)

Question 14

Which of the following statements best describes preferred shares?

Accepted Answer

A)   Preferred shareholders are paid before other debt holders in the event of company dissolution.
B)   The dividends for preferred shares are a variable amount.
C)   Preferred shares are less costly than debt financing.
D)   Preferred shareholders have to be paid annually.E) C) and D)
F) B) and D)

Question 15

What is risk management?

Accepted Answer

the process of identifying and...

Question 16

Linda's Kitchen is a bakery.Flour,sugar,eggs,milk,and chocolate would be included in which type of expenses?

Accepted Answer

A)   operating expenses
B)   general expenses
C)   managerial expenses
D)   administrative expensesE) B) and C)
F) A) and B)

Question 17

Which of the following is the process of selecting the capital expenditures that offer the best returns and meet the goal of maximizing the company's value?

Accepted Answer

A)   capital evaluation
B)   capital allocation
C)   budget analysis
D)   capital budgetingE) B) and D)
F) C) and D)

Question 18

The funds that are kept by the company out of profits and after dividends are paid are called which of the following?

Accepted Answer

A)   share equity
B)   investor earnings
C)   retained earnings
D)   secondary earningsE) A) and C)
F) C) and D)

Question 19

What are the four major ways of dealing with risk?

Accepted Answer

A)   control, retention, transfer, and avoidance
B)   avoidance, retention, control, and retirement
C)   control, retention, retirement, and avoidance
D)   avoidance, retention, retrenchment, and controlE) B) and D)
F) A) and B)

Question 20

Financial management is best described by which of the following?

Accepted Answer

A)   It is typically performed by a company's CEO.
B)   It uses financial statements prepared by accountants to make financial decisions.
C)   Its purpose is to collect and present financial data.
D)   It is completely different from accounting.E) A) and D)
F) All of the above

Exam 18: Finance Maximizing the Value

Which of the following is the process of selecting the capital expenditures that offer the best returns and meet the goal of maximizing the company's value?

Correct AnswerverifiedShow Answer

In finance,the opportunity for a profit is called return.

Correct AnswerverifiedShow Answer

Financial managers are best described by which of the following?

Correct AnswerverifiedShow Answer

Linda's Kitchen is a bakery.Flour,sugar,eggs,milk,and chocolate would be included in which type of expenses?

Correct AnswerverifiedShow Answer

A short-term forecast is also called an operating plan.

Correct AnswerverifiedShow Answer

What is risk management?

Correct Answerverifiedthe process of identifying and...View AnswerShow Answer

List three common reasons that companies make capital expenditures.

Correct Answerverifiedto expand,to replace...View AnswerShow Answer

Financial management is best described by which of the following?

Correct AnswerverifiedShow Answer

The major disadvantage of debt financing is the inability to deduct interest expenses for income tax purposes.

Correct AnswerverifiedShow Answer

Which of the following is a type of loan often used to finance buildup of inventory for seasonal (cyclical) businesses just before their strongest sales period?

Correct AnswerverifiedShow Answer

Long-term debt would be used to finance which of the following activities?

Correct AnswerverifiedShow Answer

The financial planning process begins with which of the following?

Correct AnswerverifiedShow Answer

The funds that are kept by the company out of profits and after dividends are paid are called which of the following?

Correct AnswerverifiedShow Answer

Which of the following statements best describes preferred shares?

Correct AnswerverifiedShow Answer

Funds invested in long-lived assets,such as land,buildings,machinery,and equipment,are called which of the following?

Correct AnswerverifiedShow Answer

Lines of credit are short-term loans that are secured by collateral.

Correct AnswerverifiedShow Answer

The concept of risk-return trade-off is best described by which of the following?

Correct AnswerverifiedShow Answer

The three most popular types of marketable securities are Treasury bills,certificates of deposit,and which of the following?

Correct AnswerverifiedShow Answer

What are the four major ways of dealing with risk?

Correct AnswerverifiedShow Answer

Trade credit is credit extended to the buyer by the seller.It is entered in the buyer's books as an account receivable.

Correct AnswerverifiedShow Answer

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the process of identifying and...
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to expand,to replace...
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