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Chapter 1: Getting started—Principles of finance
Multiple choice: Choose the one alternative that best completes the
statement or answers the question
1. Which of the following statements best represents what finance is about?
A. The study of how political, social and economic forces affect corporations
B. Maximising profits
C. The study of how people and businesses make investment decisions and how to
finance those decisions
D. Reducing risk
Difficulty: Moderate
AACSB: 6. Reflective thinking
Learning Objective: 1.1 Understand the importance of finance in your personal and
professional lives, and identify the three primary business decisions that financial managers
make
Answer: C
2. From a financial point of view, a company that decides to develop a new product is
making [blank].
A. a financing decision
B. an investment decision
C. a capital structure decision
D. a cash flow decision
Difficulty: Basic
AACSB: 6. Reflective thinking
Learning Objective: 1.1 Understand the importance of finance in your personal and
professional lives, and identify the three primary business decisions that financial managers
make
Answer: B
Full download please contact or qidiantiku.com
,Full download please contact or qidiantiku.com
3. Working capital management refers to [blank].
A. long-term financing decisions
B. the management of cash flows
C. investing in product development
D. capital structure
Difficulty: Basic
AACSB: 7. Application of knowledge
Learning Objective: 1.1 Understand the importance of finance in your personal and
professional lives, and identify the three primary business decisions that financial managers
make
Answer: B
4. A key component of finance is the management and interpretation of [blank].
A. marketing managers
B. accounting staff
C. entrepreneurship
D. information
Difficulty: Moderate
AACSB: 6. Reflective thinking
Learning Objective: 1.1 Understand the importance of finance in your personal and
professional lives, and identify the three primary business decisions that financial managers
make
Answer: D
5. According to the authors, the personal decision to take a year off from work to obtain a
graduate degree in business is primarily a(n) [blank] decision.
A. social
B. financial
C. ethical
D. investment
Full download please contact or qidiantiku.com
,Full download please contact or qidiantiku.com
Difficulty: Moderate
AACSB: 6. Reflective thinking
Learning Objective: 1.1 Understand the importance of finance in your personal and
professional lives, and identify the three primary business decisions that financial managers
make
Answer: D
6. The area of finance that deals with long-term investment decisions is known as [blank].
A. capital structure
B. working capital management
C. financial strategy
D. capital budgeting
Difficulty: Basic
AACSB: 6. Reflective thinking
Learning Objective: 1.1 Understand the importance of finance in your personal and
professional lives, and identify the three primary business decisions that financial managers
make
Answer: D
7. Capital structure refers to the financing of long-term investments.
A. True
B. False
Difficulty: Basic
AACSB: 6. Reflective thinking
Learning Objective: 1.1 Understand the importance of finance in your personal and
professional lives, and identify the three primary business decisions that financial managers
make
Answer: A
8. Financial decisions can be difficult because the cost of investments can be estimated
with greater confidence than future payoffs.
Full download please contact or qidiantiku.com
, Full download please contact or qidiantiku.com
A. True
B. False
Difficulty: Moderate
AACSB: 6. Reflective thinking
Learning Objective: 1.1 Understand the importance of finance in your personal and
professional lives, and identify the three primary business decisions that financial managers
make
Answer: A
Short answer: Write the word or phrase that best completes each
statement or answers the question
9. What are the three basic questions addressed by the study of investments?
Difficulty: Moderate
AACSB: 6. Reflective thinking
Learning Objective: 1.1 Understand the importance of finance in your personal and
professional lives and identify the three primary business decisions that financial managers
make
Answer:
1. What investments should the firm undertake?
2. How should the firm fund these investments?
3. How can the firm best manage cash flows in its day-to-day operations?
Multiple choice: Choose the one alternative that best completes the
statement or answers the question
10.Sole proprietorships are often used at which stage of a firm’s life?
A. After a partnership
B. At the early stages
Full download please contact or qidiantiku.com
Chapter 1: Getting started—Principles of finance
Multiple choice: Choose the one alternative that best completes the
statement or answers the question
1. Which of the following statements best represents what finance is about?
A. The study of how political, social and economic forces affect corporations
B. Maximising profits
C. The study of how people and businesses make investment decisions and how to
finance those decisions
D. Reducing risk
Difficulty: Moderate
AACSB: 6. Reflective thinking
Learning Objective: 1.1 Understand the importance of finance in your personal and
professional lives, and identify the three primary business decisions that financial managers
make
Answer: C
2. From a financial point of view, a company that decides to develop a new product is
making [blank].
A. a financing decision
B. an investment decision
C. a capital structure decision
D. a cash flow decision
Difficulty: Basic
AACSB: 6. Reflective thinking
Learning Objective: 1.1 Understand the importance of finance in your personal and
professional lives, and identify the three primary business decisions that financial managers
make
Answer: B
Full download please contact or qidiantiku.com
,Full download please contact or qidiantiku.com
3. Working capital management refers to [blank].
A. long-term financing decisions
B. the management of cash flows
C. investing in product development
D. capital structure
Difficulty: Basic
AACSB: 7. Application of knowledge
Learning Objective: 1.1 Understand the importance of finance in your personal and
professional lives, and identify the three primary business decisions that financial managers
make
Answer: B
4. A key component of finance is the management and interpretation of [blank].
A. marketing managers
B. accounting staff
C. entrepreneurship
D. information
Difficulty: Moderate
AACSB: 6. Reflective thinking
Learning Objective: 1.1 Understand the importance of finance in your personal and
professional lives, and identify the three primary business decisions that financial managers
make
Answer: D
5. According to the authors, the personal decision to take a year off from work to obtain a
graduate degree in business is primarily a(n) [blank] decision.
A. social
B. financial
C. ethical
D. investment
Full download please contact or qidiantiku.com
,Full download please contact or qidiantiku.com
Difficulty: Moderate
AACSB: 6. Reflective thinking
Learning Objective: 1.1 Understand the importance of finance in your personal and
professional lives, and identify the three primary business decisions that financial managers
make
Answer: D
6. The area of finance that deals with long-term investment decisions is known as [blank].
A. capital structure
B. working capital management
C. financial strategy
D. capital budgeting
Difficulty: Basic
AACSB: 6. Reflective thinking
Learning Objective: 1.1 Understand the importance of finance in your personal and
professional lives, and identify the three primary business decisions that financial managers
make
Answer: D
7. Capital structure refers to the financing of long-term investments.
A. True
B. False
Difficulty: Basic
AACSB: 6. Reflective thinking
Learning Objective: 1.1 Understand the importance of finance in your personal and
professional lives, and identify the three primary business decisions that financial managers
make
Answer: A
8. Financial decisions can be difficult because the cost of investments can be estimated
with greater confidence than future payoffs.
Full download please contact or qidiantiku.com
, Full download please contact or qidiantiku.com
A. True
B. False
Difficulty: Moderate
AACSB: 6. Reflective thinking
Learning Objective: 1.1 Understand the importance of finance in your personal and
professional lives, and identify the three primary business decisions that financial managers
make
Answer: A
Short answer: Write the word or phrase that best completes each
statement or answers the question
9. What are the three basic questions addressed by the study of investments?
Difficulty: Moderate
AACSB: 6. Reflective thinking
Learning Objective: 1.1 Understand the importance of finance in your personal and
professional lives and identify the three primary business decisions that financial managers
make
Answer:
1. What investments should the firm undertake?
2. How should the firm fund these investments?
3. How can the firm best manage cash flows in its day-to-day operations?
Multiple choice: Choose the one alternative that best completes the
statement or answers the question
10.Sole proprietorships are often used at which stage of a firm’s life?
A. After a partnership
B. At the early stages
Full download please contact or qidiantiku.com
