Exam (elaborations)
Test Bank for Foundations of Finance, 10 edition (Keown/Martin/Petty) Latest & Updated 2024
- Course
- Institution
- Book
Test Bank for Foundations of Finance, 10 edition (Keown/Martin/Petty) Latest & Updated 2024
[Show more]
Connected book
Book Title:
Author(s):
- Edition:
- ISBN:
- Edition:
Seller
Follow
a_plus_work
Reviews received
Content preview
Foundations of Finance, 10e(Keown/Martin/Petty) Latest &
Updated 2024
,Foundations of Finance, 10e (Keown/Martin/Petty) Latest &
Updated A+
Chapter 1 An Introduction to the Foundations of Financial Management
Learning Objective 1.1
1) Financial management deals with the maintenance and creation of economic value or
wealth. Answer: TRUE
Diff: 1 Page Ref: 3
Keywords: Financial Management Learning Obj.: L.O. 1.1
AACSB: Reflective Thinking
2) Each financial decision made by a corporate manager can be evaluated by its direct
impact on the corporation's stock price.
Answer: FALSE Diff: 1 Page Ref: 4
Keywords: Goal of the Firm Learning Obj.: L.O. 1.1 AACSB: Reflective Thinking
3) The fundamental goal of a business is to maximize the retained earnings available to the
corporation's shareholders.
Answer: FALSE Diff: 1 Page Ref: 3
Keywords: Goal of the Firm Learning Obj.: L.O. 1.1 AACSB: Reflective Thinking
4) Shareholder wealth maximization means maximizing the price of the existing common
stock. Answer: TRUE
Diff: 1 Page Ref: 3
,Keywords: Shareholder Wealth, Goal of the Firm Learning Obj.: L.O. 1.1
AACSB: Reflective Thinking
5) It is important to evaluate a corporate manager's financial decision by measuring the
effect the decision
should have on the corporation's stock price if everything else were held constant. Answer:
TRUE
Diff: 2 Page Ref: 4
Keywords: Goal of the Firm, Maximize Shareholder Wealth Learning Obj.: L.O. 1.1
AACSB: Reflective Thinking
6) Corporate managers should accept investment projects that maximize profits in the short
run because of the time value of money.
Answer: FALSE Diff: 2 Page Ref: 4
Keywords: Goal of the Firm, Profits, Time Value of Money Learning Obj.: L.O. 1.1
AACSB: Reflective Thinking
7) The goal of the firm's financial managers should be the maximization of the total value of
the firm's stock.
Answer: TRUE Diff: 1 Page Ref: 3
Keywords: Goal of the Firm Learning Obj.: L.O. 1.1 AACSB: Reflective Thinking
, 8) The payment of a dividend to current shareholders will have no impact on a corporation's
share price because the cash paid is not available to future potential shareholders who may want
to buy the corporation's stock.
Answer: FALSE Diff: 1 Page Ref: 4
Keywords: Goal of the Firm Learning Obj.: L.O. 1.1 AACSB: Reflective Thinking
9) One problem with maximization of shareholder wealth as a goal is that it ignores risk
taken by the firm's financial decisions.
Answer: FALSE Diff: 1 Page Ref: 4
Keywords: Goal of the Firm Learning Obj.: L.O. 1.1 AACSB: Reflective Thinking
10) The goal of profit maximization ignores the risk of financial decisions. Answer: FALSE
Diff: 1 Page Ref: 4 Keywords: Goal of the Firm Learning Obj.: L.O. 1.1 AACSB: Reflective
Thinking
11) Only a firm's financial decisions affect its stock prices. Answer: FALSE
Diff: 1 Page Ref: 4
Keywords: Determinants of Stock Price Learning Obj.: L.O. 1.1
AACSB: Reflective Thinking
12) Shareholders react to poor investment or dividend decisions by causing the total value of
the firm's stock to fall, and they react to good decisions by bidding the price of the stock up.
Answer: TRUE
Diff: 2 Page Ref: 4
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller a_plus_work. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $11.49. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
75323 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now