Test Bank for Foundations of Finance 10th Edition by Arthur J. Keown | Complete All Chapters Exam Questions & Verified A+ Answers Study Guide | ISBN 0134897269

Test Bank for Foundations of Finance 10th Edition by Arthur J.
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Keown | Complete All Chapters Exam Questions & Verified A+
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Answers Guide | ISBN 0134897269
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TESTBANK n

,Foundations of Finance, 10e (Keown/Martin/Petty) n n n n




Chapter 1 An Introduction to the Foundations of Financial Management
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Learning Objective 1.1 n n




1) Financial management deals with the maintenance and creation of economic value or wealth.
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n Answer: TRUE n




Diff: 1 n Page Ref: 3 n n




Keywords:FinancialManagement n n




n Learning Obj.: L.O. 1.1 n n n




AACSB: Reflective Thinking n n




2) Each financial decision made by a corporate manager can be evaluated by its direct impact on the
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corporation's stock price.
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Answer: FALSE n




n Diff: 1 n PageRef:4 n n




Keywords: Goal of the Firm n n n n




n Learning Obj.: L.O. 1.1 n n n




n AACSB: ReflectiveThinking n n




3) The fundamental goal of a business is to maximize the retained earnings available to the corporation's
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shareholders.
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Answer: FALSE n




n Diff: 1 PageRef:3
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Keywords: Goal of the Firm n n n n




n Learning Obj.: L.O. 1.1 n n n




n AACSB: ReflectiveThinking n n




4) Shareholder wealth maximization means maximizing the price of the existing common stock.
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n Answer: TRUE n




Diff: 1 n Page Ref: 3 n n




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,Keywords: Shareholder Wealth, Goal of the Firm
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n Learning Obj.: L.O. 1.1 n n n




AACSB: Reflective Thinking n n




5) It is important to evaluate a corporate manager's financial decision by measuring the effect the decision
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should have on the corporation's stock price if everything else were held constant.
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n Answer: TRUE n




Diff: 2 n Page Ref: 4 n n




Keywords: Goal of the Firm, Maximize Shareholder Wealth Learning
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n Obj.: L.O. 1.1
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AACSB: Reflective Thinking n n




n angelinas




https://www.stuvia.com/user/angelinas

, 6) Corporate managers should accept investment projects that maximize profits in the short run because of
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the time value of money.
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Answer: FALSE n




n Diff: 2 PageRef:4
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Keywords: Goal of the Firm, Profits, Time Value of Money Learning
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n Obj.: L.O. 1.1
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AACSB: Reflective Thinking n n




7) The goal of the firm's financial managers should be the maximization of the total value of the firm's
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stock.
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Answer: TRUE n




n Diff: 1 PageRef:3
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Keywords: Goal of the Firm n n n n




n Learning Obj.: L.O. 1.1 n n n




n AACSB: ReflectiveThinking n n




8) The payment of a dividend to current shareholders will have no impact on a corporation's share price
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because the cash paid is not available to future potential shareholders who may want to buy the
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corporation's stock.
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Answer: FALSE n




n Diff: 1 PageRef:4
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Keywords: Goal of the Firm n n n n




n Learning Obj.: L.O. 1.1 n n n




n AACSB: ReflectiveThinking n n




9) One problem with maximization of shareholder wealth as a goal is that it ignores risk taken by the
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firm's financial decisions.
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Answer: FALSE n




n Diff: 1 PageRef:4
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Keywords: Goal of the Firm n n n n




n Learning Obj.: L.O. 1.1 n n n




n AACSB: ReflectiveThinking n n




n angelinas




https://www.stuvia.com/user/angelinas