Test Bank For NEW Corporate Finance Online Stanley Eakins William McNally

Corporate Finance Online (Eakins/McNally)
Chapter 1 Overview of Finance

1.1 LO1: Learn the Features of CFO

1) Section 1.1 has no questions.

1.2 LO2: Learn about the World of Finance

1) Finance is:
A) The study of investment management
B) The study of the stock exchange
C) The study of the capital market and its many players
D) The study of money management for personal use
Answer: C
Comment: Finance is the study of the capital market and its many players.
Diff: 1
Section: 2
AACSB: Analytical Skills
Learning Outcome: F-01: Describe the different financial markets and the role of the financial managers

2) What is the purpose of the capital market?
A) To match people with money to entrepreneurs with great business ideas or concepts
B) To more easily regulate the flow of money between parties
C) To make money without trying
D) To allow people to buy stocks for retirement
Answer: A
Comment: The capital market matches entrepreneurs with great business ideas or concepts to people
with money.
Diff: 1
Section: 2
AACSB: Analytical Skills
Learning Outcome: F-01: Describe the different financial markets and the role of the financial managers

3) Which of these is not one of the basic questions for corporate finance?
A) How should we raise the money?
B) What are we going to make?
C) What do we do with our profits?
D) How big of a bonus should we get?
Answer: D
Comment: The three questions for corporate finance are: How should we raise the money? What are we
going to make? Do we pay out our profits, or invest them?
Diff: 1
Section: 2
AACSB: Analytical Skills
Learning Outcome: F-01: Describe the different financial markets and the role of the financial managers


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Copyright © 2014 Pearson Education, Inc.

, 4) Which one of these would a financial advisor say is most important?
A) Making decent dough over the long haul
B) Making a quick buck
C) Avoiding paying taxes whenever possible
D) Properly financing a large purchase
Answer: A
Comment: Most importantly, financial advisors help you make decent dough over the long haul.
Diff: 1
Section: 2
AACSB: Analytical Skills
Learning Outcome: F-01: Describe the different financial markets and the role of the financial managers

5) ________ would be the course where you learn to tell the good stocks from the bad, and the sure things
from the really risky.
A) Corporate Finance
B) Investments
C) Personal Finance
D) Derivative Securities
Answer: B
Comment: Investments is the course where you learn to tell the good stocks from the bad, and the sure
things from the really risky.
Diff: 1
Section: 2
AACSB: Analytical Skills
Learning Outcome: F-01: Describe the different financial markets and the role of the financial managers

1.3 LO3: Learn about the Financial System

1) Money market securities have maturities of one year or less.
Answer: TRUE
Comment: Money Market securities mature less than 1 year from their issue date.
Diff: 1
Section: 3.2
AACSB: Analytical Skills
Learning Outcome: F-01: Describe the different financial markets and the role of the financial managers

2) Regulating the banking institutions is one of the Federal Reserve's duties.
Answer: TRUE
Comment: The Federal Reserve has 3 duties: 1) Conduct monetary policy 2) Regulate banking
institutions 3) Provide financial services to depository institutions.
Diff: 1
Section: 3.2
AACSB: Analytical Skills
Learning Outcome: F-01: Describe the different financial markets and the role of the financial managers




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Copyright © 2014 Pearson Education, Inc.