TEST BANKj
Foundations of Finance
j j
13th Edition
j
MedjC
TEST BANK!!!
j
,FoundationsjofjFinance,j13thj(Keown/Martin/Petty)
Chapterj1j AnjIntroductionjtojthejFoundationsjofjFinancialjManagement
LearningjObjectivej 1.1
1) Financialjmanagementjdealsjwithjthejmaintenancejandjcreationjofjeconomicjvaluejorjwealth.jA
nswer:j TRUE
Diff:j1 PagejRef:j3
Keywords:jFinancialjManagementjLearnin
gjObj.:jL.O.j1.1
AACSB:j ReflectivejThinking
2) Eachjfinancialjdecisionjmadejbyjajcorporatejmanagerjcanjbejevaluatedjbyjitsjdirectjimpactjonjthejco
rporation'sjstockjprice.
Answer:jFALSEjDif
f:j1 PagejRef:j4
Keywords:jGoaljofjthejFirmjL
earningjObj.:jL.O.j1.1jAACS
B:jReflectivejThinking
3) Thejfundamentaljgoaljofjajbusinessjisjtojmaximizejthejretainedjearningsjavailablejtojthejcorporation'sjsh
areholders.
Answer:jFALSEjDif
f:j1 PagejRef:j3
Keywords:jGoaljofjthejFirmjL
earningjObj.:jL.O.j1.1jAACS
B:jReflectivejThinking
4) Shareholderjwealthjmaximizationjmeansjmaximizingjthejpricejofjthejexistingjcommonjstock.jA
nswer:j TRUE
Diff:j1 PagejRef:j3
MedjC
,Keywords:jShareholderjWealth,jGoaljofjthejFirmjLearn
ingjObj.:jL.O.j1.1
AACSB:j ReflectivejThinking
5) Itjisjimportantjtojevaluatejajcorporatejmanager'sjfinancialjdecisionjbyjmeasuringjthejeffectjthejdecision
shouldjhavejonjthejcorporation'sjstockjpricejifjeverythingjelsejwerejheldjconstant.jAnsw
er:j TRUE
Diff:j2 PagejRef:j4
Keywords:jGoaljofjthejFirm,jMaximizejShareholderjWealthjLearning
jObj.:jL.O.j1.1
AACSB:j ReflectivejThinking
MedjC
, 6) Corporatejmanagersjshouldjacceptjinvestmentjprojectsjthatjmaximizejprofitsjinjthejshortjrunjbecausejof
jthejtimejvaluejofjmoney.
Answer:jFALSEjDif
f:j2 PagejRef:j4
Keywords:jGoaljofjthejFirm,jProfits,jTimejValuejofjMoneyjLearningj
Obj.:jL.O.j1.1
AACSB:j ReflectivejThinking
7) Thejgoaljofjthejfirm'sjfinancialjmanagersjshouldjbejthejmaximizationjofjthejtotaljvaluejofjthejfirm'sjsto
ck.
Answer:j TRUEjDiff
:j1 PagejRef:j3
Keywords:jGoaljofjthejFirmjL
earningjObj.:jL.O.j1.1jAACS
B:jReflectivejThinking
8) Thejpaymentjofjajdividendjtojcurrentjshareholdersjwilljhavejnojimpactjonjajcorporation'sjsharejpricejbe
causejthejcashjpaidjisjnotjavailablejtojfuturejpotentialjshareholdersjwhojmayjwantjtojbuyjthejcorporation'
sjstock.
Answer:jFALSEjDif
f:j1 PagejRef:j4
Keywords:jGoaljofjthejFirmjL
earningjObj.:jL.O.j1.1jAACS
B:jReflectivejThinking
9) Onejproblemjwithjmaximizationjofjshareholderjwealthjasjajgoaljisjthatjitjignoresjriskjtakenjbyjthejfir
m'sjfinancialjdecisions.
Answer:jFALSEjDif
f:j1 PagejRef:j4
Keywords:jGoaljofjthejFirmjL
earningjObj.:jL.O.j1.1jAACS
B:jReflectivejThinking
MedjC
Foundations of Finance
j j
13th Edition
j
MedjC
TEST BANK!!!
j
,FoundationsjofjFinance,j13thj(Keown/Martin/Petty)
Chapterj1j AnjIntroductionjtojthejFoundationsjofjFinancialjManagement
LearningjObjectivej 1.1
1) Financialjmanagementjdealsjwithjthejmaintenancejandjcreationjofjeconomicjvaluejorjwealth.jA
nswer:j TRUE
Diff:j1 PagejRef:j3
Keywords:jFinancialjManagementjLearnin
gjObj.:jL.O.j1.1
AACSB:j ReflectivejThinking
2) Eachjfinancialjdecisionjmadejbyjajcorporatejmanagerjcanjbejevaluatedjbyjitsjdirectjimpactjonjthejco
rporation'sjstockjprice.
Answer:jFALSEjDif
f:j1 PagejRef:j4
Keywords:jGoaljofjthejFirmjL
earningjObj.:jL.O.j1.1jAACS
B:jReflectivejThinking
3) Thejfundamentaljgoaljofjajbusinessjisjtojmaximizejthejretainedjearningsjavailablejtojthejcorporation'sjsh
areholders.
Answer:jFALSEjDif
f:j1 PagejRef:j3
Keywords:jGoaljofjthejFirmjL
earningjObj.:jL.O.j1.1jAACS
B:jReflectivejThinking
4) Shareholderjwealthjmaximizationjmeansjmaximizingjthejpricejofjthejexistingjcommonjstock.jA
nswer:j TRUE
Diff:j1 PagejRef:j3
MedjC
,Keywords:jShareholderjWealth,jGoaljofjthejFirmjLearn
ingjObj.:jL.O.j1.1
AACSB:j ReflectivejThinking
5) Itjisjimportantjtojevaluatejajcorporatejmanager'sjfinancialjdecisionjbyjmeasuringjthejeffectjthejdecision
shouldjhavejonjthejcorporation'sjstockjpricejifjeverythingjelsejwerejheldjconstant.jAnsw
er:j TRUE
Diff:j2 PagejRef:j4
Keywords:jGoaljofjthejFirm,jMaximizejShareholderjWealthjLearning
jObj.:jL.O.j1.1
AACSB:j ReflectivejThinking
MedjC
, 6) Corporatejmanagersjshouldjacceptjinvestmentjprojectsjthatjmaximizejprofitsjinjthejshortjrunjbecausejof
jthejtimejvaluejofjmoney.
Answer:jFALSEjDif
f:j2 PagejRef:j4
Keywords:jGoaljofjthejFirm,jProfits,jTimejValuejofjMoneyjLearningj
Obj.:jL.O.j1.1
AACSB:j ReflectivejThinking
7) Thejgoaljofjthejfirm'sjfinancialjmanagersjshouldjbejthejmaximizationjofjthejtotaljvaluejofjthejfirm'sjsto
ck.
Answer:j TRUEjDiff
:j1 PagejRef:j3
Keywords:jGoaljofjthejFirmjL
earningjObj.:jL.O.j1.1jAACS
B:jReflectivejThinking
8) Thejpaymentjofjajdividendjtojcurrentjshareholdersjwilljhavejnojimpactjonjajcorporation'sjsharejpricejbe
causejthejcashjpaidjisjnotjavailablejtojfuturejpotentialjshareholdersjwhojmayjwantjtojbuyjthejcorporation'
sjstock.
Answer:jFALSEjDif
f:j1 PagejRef:j4
Keywords:jGoaljofjthejFirmjL
earningjObj.:jL.O.j1.1jAACS
B:jReflectivejThinking
9) Onejproblemjwithjmaximizationjofjshareholderjwealthjasjajgoaljisjthatjitjignoresjriskjtakenjbyjthejfir
m'sjfinancialjdecisions.
Answer:jFALSEjDif
f:j1 PagejRef:j4
Keywords:jGoaljofjthejFirmjL
earningjObj.:jL.O.j1.1jAACS
B:jReflectivejThinking
MedjC
