Financial Management, 12e (Titman/Keown/Martin)
Chapter 1 Getting Started-Principles of Finance
1.1 Finance: An Overview
1) Which of the following statements best represents what finance is about?
A) How political, social, and economic forces affect corporations
B) Maximizing profits
C) The study of how people and businesses make investment decisions and how to
finance those decisions
D) Reducing risk
Answer: C
Diff: 1
AACSB: 6. Reflective thinking
Question Status: Revised
Objective: 1.1 Understand the importance of finance and identify the three primary business
decisions that financial managers make.
Keywords: what is finance?
Principles: Principle 3: Cash Flows Are the Source of Value
2) From a financial point of view, a company that decides to develop new product is
making
A) a financing decision.
B) an investment decision.
C) a capital structure decision.
D) a cash flow decision.
Answer: B
Diff: 1
AACSB: 6. Reflective thinking
,Question Status: New question
Objective: 1.1 Understand the importance of finance and identify the three primary business
decisions that financial managers make.
Keywords: what is finance?
Principles: Principle 3: Cash Flows Are the Source of Value
3) Working capital management refers to
A) long-term financing decisions.
B) the management of cash flows.
C) investing in product development.
D) capital structure.
Answer: B
Diff: 2
AACSB: 6. Reflective thinking
Question Status: Previous edition
Objective: 1.1 Understand the importance of finance and identify the three primary business
decisions that financial managers make.
Keywords: capital structure
Principles: Principle 3: Cash Flows Are the Source of Value
,4) Finance managers need to interact constantly with
A) marketing managers.
B) accounting staff.
C) management information systems staff.
D) all of the above.
Answer: D
Diff: 2
AACSB: 6. Reflective thinking
Question Status: New question
Objective: 1.1 Understand the importance of finance and identify the three primary business
decisions that financial managers make.
Keywords: what is finance?
Principles: Principle 3: Cash Flows Are the Source of Value
5) The personal decision to obtain a college degree in business is primarily a(n)
________ decision.
A) social
B) investment
C) ethical
D) financing
Answer: B
Diff: 2
AACSB: 6. Reflective thinking
Question Status: New question
Objective: 1.1 Understand the importance of finance and identify the three primary business
decisions that financial managers make.
Keywords: what is finance?
Principles: Principle 3: Cash Flows Are the Source of Value
6) The area of finance that deals with long-term investment decisions is known as
, A) capital structure.
B) working capital management.
C) financial strategy.
D) capital budgeting.
Answer: D
Diff: 2
AACSB: 6. Reflective thinking
Question Status: New question
Objective: 1.1 Understand the importance of finance and identify the three primary business
decisions that financial managers make.
Keywords: what is finance?
Principles: Principle 3: Cash Flows Are the Source of Value
7) Capital structure refers to the financing of long-term investments.
Answer: TRUE
Diff: 1
AACSB: 6. Reflective thinking
Question Status: New question
Objective: 1.1 Understand the importance of finance and identify the three primary business
decisions that financial managers make.
Keywords: what is finance?
Principles: Principle 3: Cash Flows Are the Source of Value
8) Business financial decisions are fundamentally different from personal financial
decisions.
Answer: FALSE
Diff: 1
AACSB: 6. Reflective thinking
Question Status: New question
Objective: 1.1 Understand the importance of finance and identify the three primary business
decisions that financial managers make.
Keywords: what is finance?
Chapter 1 Getting Started-Principles of Finance
1.1 Finance: An Overview
1) Which of the following statements best represents what finance is about?
A) How political, social, and economic forces affect corporations
B) Maximizing profits
C) The study of how people and businesses make investment decisions and how to
finance those decisions
D) Reducing risk
Answer: C
Diff: 1
AACSB: 6. Reflective thinking
Question Status: Revised
Objective: 1.1 Understand the importance of finance and identify the three primary business
decisions that financial managers make.
Keywords: what is finance?
Principles: Principle 3: Cash Flows Are the Source of Value
2) From a financial point of view, a company that decides to develop new product is
making
A) a financing decision.
B) an investment decision.
C) a capital structure decision.
D) a cash flow decision.
Answer: B
Diff: 1
AACSB: 6. Reflective thinking
,Question Status: New question
Objective: 1.1 Understand the importance of finance and identify the three primary business
decisions that financial managers make.
Keywords: what is finance?
Principles: Principle 3: Cash Flows Are the Source of Value
3) Working capital management refers to
A) long-term financing decisions.
B) the management of cash flows.
C) investing in product development.
D) capital structure.
Answer: B
Diff: 2
AACSB: 6. Reflective thinking
Question Status: Previous edition
Objective: 1.1 Understand the importance of finance and identify the three primary business
decisions that financial managers make.
Keywords: capital structure
Principles: Principle 3: Cash Flows Are the Source of Value
,4) Finance managers need to interact constantly with
A) marketing managers.
B) accounting staff.
C) management information systems staff.
D) all of the above.
Answer: D
Diff: 2
AACSB: 6. Reflective thinking
Question Status: New question
Objective: 1.1 Understand the importance of finance and identify the three primary business
decisions that financial managers make.
Keywords: what is finance?
Principles: Principle 3: Cash Flows Are the Source of Value
5) The personal decision to obtain a college degree in business is primarily a(n)
________ decision.
A) social
B) investment
C) ethical
D) financing
Answer: B
Diff: 2
AACSB: 6. Reflective thinking
Question Status: New question
Objective: 1.1 Understand the importance of finance and identify the three primary business
decisions that financial managers make.
Keywords: what is finance?
Principles: Principle 3: Cash Flows Are the Source of Value
6) The area of finance that deals with long-term investment decisions is known as
, A) capital structure.
B) working capital management.
C) financial strategy.
D) capital budgeting.
Answer: D
Diff: 2
AACSB: 6. Reflective thinking
Question Status: New question
Objective: 1.1 Understand the importance of finance and identify the three primary business
decisions that financial managers make.
Keywords: what is finance?
Principles: Principle 3: Cash Flows Are the Source of Value
7) Capital structure refers to the financing of long-term investments.
Answer: TRUE
Diff: 1
AACSB: 6. Reflective thinking
Question Status: New question
Objective: 1.1 Understand the importance of finance and identify the three primary business
decisions that financial managers make.
Keywords: what is finance?
Principles: Principle 3: Cash Flows Are the Source of Value
8) Business financial decisions are fundamentally different from personal financial
decisions.
Answer: FALSE
Diff: 1
AACSB: 6. Reflective thinking
Question Status: New question
Objective: 1.1 Understand the importance of finance and identify the three primary business
decisions that financial managers make.
Keywords: what is finance?
