Test Bank for Foundations of Finance 10th Edition by Arthur J. Keown | All Chapters Covered Complete Guide

Test Bank For:
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Foundations Of Finance 10th Edition By Arthur J.
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Keown | All Chapters Covered Complete Guide
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,Foundations of Finance, 10e (Keown/Martin/Petty) v v v v




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




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




Diff: 1 v Page Ref: 3 v v




Keywords:FinancialManagement v v




v Learning Obj.: L.O. 1.1 v v v




AACSB: Reflective Thinking v v




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 v




v Diff: 1 v PageRef:4 v v




Keywords: Goal of the Firm v v v v




v Learning Obj.: L.O. 1.1 v v v




v AACSB: ReflectiveThinking v v




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 v




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




v Learning Obj.: L.O. 1.1 v v v




v AACSB: ReflectiveThinking v v




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




Diff: 1 v Page Ref: 3 v v




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




AACSB: Reflective Thinking v v




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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v Answer: TRUE v




Diff: 2 v Page Ref: 4 v v




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




v angelinas




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, 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 v




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




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 v




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




v Learning Obj.: L.O. 1.1 v v v




v AACSB: ReflectiveThinking v v




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 v




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




v Learning Obj.: L.O. 1.1 v v v




v AACSB: ReflectiveThinking v v




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 v




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




v Learning Obj.: L.O. 1.1 v v v




v AACSB: ReflectiveThinking v v




v angelinas




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