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m m m m m m m m m
Name: Class: Date:
Chapter m01:mAnmOverviewmofmManagerialmFinance
1. Which mof mthemfollowingmstatementsmismcorrect? mAssume meverythingmelsemequal.
a. Riskiermassetsmalwaysmhavemhighermmarketmvalues.
b. Riskiermassetsmaremmoremvaluable mthan m(preferred mto)mlessmrisky massets.
c. Themsoonermcash mismreceived,mthemmoremvaluable mitmis.
d. Investorsmgenerally mprefermshort-term,mhigh-risk massetsminvestments.
e. Investorsmgenerally mreceive mhighermreturnsmon minvestmentsmwith mlowmrisk mthan minvestmentsmwith mhigh mrisk.
ANSWER:m c
2. Themsuccessmof mfinancialminstitutionsmdependsmon mthem .
a. understandingmofmthemfactorsmthatmcauseminterestmratesmand mothermreturnsmin mthemfinancialmmarketsmto mrisemand mfall
b. environmentally mresponsible mbehaviormof mthemshareholdersmof mcorporations
c. expectationsmof mlong-termminvestorsmin mthemcompany
d. awarenessmof mthemshareholdersmregardingmthemregulationsmthatmaffectmpublicmcorporations
e. priormknowledge mof mthemdecisionsmthatmpublic mcorporationsmmakemconcerningmtheirmcash mflows
ANSWER:m a
3. Which mof mthemfollowingmismtruemof mtheminvestmentmfunction mof mfinance?
a. Theminvestmentmfunction mfocusesmon msocially mresponsible mactionsmtaken mby mcorporations.
b. Theminvestmentmfunctionmfocusesmon mthemvalues,mrisks,mandmreturnsmassociatedmwithmfinancialmassetsmsuc
h masmstocksmand mbonds.
c. Theminvestmentmfunction mfocusesmon mthemoptimalmmix mof msecuritiesmbased mon mthemenvironment-
friendly mbehaviormof mthemcorporations.
d. Theminvestmentmfunction mfocusesmon mregulationsmapplicable mto mampublic mcorporation.
e. Theminvestmentmfunctionmfocusesmon madditionalminformationmaboutmthemproceduresmusedmto mconstructmand mre
portmfinancialmstatements.
ANSWER:m b
4. Identify mamtruemstatementmaboutmthemfinancialmservicesmprovided mby morganizations.
a. Financialmservicesmorganizationsminvestmonly min menvironmentally mresponsible mpublicmcorporations.
b. Financialmservicesmincludemservicesmprovided mby mbanksmand minsurance mcompaniesmonly.
c. Financialmservicesmorganizationsmmakeminvestmentmdecisionsmbasedmsolelymonmthemsociallymresponsiblembehav
iormof mcorporates.
d. Financialmservicesmorganizationsmprovidemcomparativemcashmflowmpositionsmofmcompetingmcorporations
mto minvestors mto mhelp mthem mwith minvestmentmdecisions.
e. Financialmservicesmorganizationsmhelpmindividualsmand mcompaniesmdeterminemhowmto minvestmmoney mtomachi
evemtheirmfinancialmgoals.
ANSWER:m e
5. Financialmservicesmrefermto mfunctionsmprovided mby morganizationsmthatm .
a. dealmwith mthemmostmefficientmmanagementmof mthemhuman mresources
b. ensure mthatmregulationsmof mthemSarbanes-Oxley mActmaremfollowed mby mpublicmcorporations
c. recommend mthemmostmenvironmentmfriendly mmethod mof moperationsmto mamcorporation
d. recommend mthemtypesmof msecuritiesmto mbemissued mto mfinance mplantmexpansions
e. dealmwith mthemmanagementmof mmoney
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m m m m m m m m m
Name: Class: Date:
Chapter m01:mAnmOverviewmofmManagerialmFinance
ANSWER:m e
6. Which mof mthemfollowingmfunctionsmdealsmwith mthemmanagementmof mmoney?
a. Marketing
b. Human mresources
c. Financialmservices
d. Information msystems
e. Research mand mdevelopment
ANSWER:m c
7. Which mofmthemfollowingmismtruemofmfinancialmservicesmprovidedmbympersonsmworkingmin mbanks,minsurance mcompanies,
mand mbrokerage mfirms?
a. Personsmworkingmin mbanks,minsurancemcompanies,mand mbrokeragemfirmsmhelp mcorporationsmtomdecidemthemtype
smof msecuritiesmto mbemissued mto mfinance mplantmexpansion.
b. Personsmworkingmin mbanks,minsurancemcompanies,mandmbrokeragemfirmsmhelpmindividualsmand mcompan
iesmdetermine mhowmto minvestmmoney mto machieve mtheirmfinancialmgoals.
c. Personsmworkingmin mbanks,minsurancemcompanies,mand mbrokeragemfirmsmhelp mcorporationsmfulfillmthemregulati
onsmrequired mby mthemSarbanes-Oxley mAct.
d. Personsmworkingmin mbanks,minsurancemcompanies,mand mbrokeragemfirmsmhelp mpublicmcorporationsmfoll
owmenvironment-friendly mpractices.
e. Personsmworkingmin mbanks,minsurancemcompanies,mand mbrokeragemfirmsmhelp mcorporationsmin mframingmt
heirmbylaws.
ANSWER:m b
8. Which mof mthemfollowingmismtruemof mfinancialminstitutions?
a. Financialminstitutionsmaremthemregulatorsmof minterestmratesmand mothermreturnsmin mfinancialmmarkets.
b. Managersmofmfinancialminstitutionsmshould mhavemanmunderstandingmofmfactorsmthatmcauseminterestmratesmandmo
thermreturnsmin mthemfinancialmmarketsmto mrisemand mfall.
c. Financialminstitutionsmaremaccountablemandmresponsible min mreportingmfinancialminformation mformpublicly-
traded mcorporations.
d. Financialminstitutionsmaremrequired mby mthemSarbanes-Oxley mActmto mdisclose mthemenvironment-
friendly mmeasuresmtaken mby minvestmentmcorporations.
e. Financialminstitutionsmrequire mpublicmcorporationsmto madoptmsocially mresponsible mwork mpractices.
ANSWER:m b
9. Themtreasurermof mamcompany mismamkey msubordinate mof mthem .
a. controller
b. financialmvicempresident
c. chief mexecutive mofficer
d. creditmmanager
e. directormof mcapitalmbudgeting
ANSWER:m b
10. Themcreditmmanagermismsupervised mby mthem .
a. treasurer
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m m m m m m m m m
Name: Class: Date:
Chapter m01:mAnmOverviewmofmManagerialmFinance
b. inventory mmanager
c. directormof mcapitalmbudgeting
d. vicempresidentmof mfinance
e. controller
ANSWER:m a
11. Themaccountingmand mtax mdepartmentsmaremthemresponsibility mof mthem .
a. treasurer
b. inventory mmanager
c. directormof mcapitalmbudgeting
d. vicempresidentmof mfinance
e. controller
ANSWER:m e
12. Everythingmelsemequal,mincludingmfirmmsize,mdollarmsales,mtypemofmproductmsold,mandmsomforth,mthemprimarymdiffer
encembetween mproprietorship mand mpartnership mbusinessmformsmismthatm .
a. ampartnership mhasmmoremownersmthan mamproprietorship
b. themcombined mpersonalmliability massociatedmwithmampartnership mismsignificantlymlessmthanmthemcombinedmperso
nalmliability massociated mwith mamproprietorship
c. ampartnership mismgenerally measiermto mformmthan mamproprietorship
d. themannualmgrowth mratemofmamproprietorship mismlimitedmbymlaw,mwhereasmthemgrowthmratemofmampartnership mismal
waysmpotentially munlimited
e. many mmorembusinessesmaremformed masmpartnershipsmthan mproprietorships
ANSWER:m a
13. Which mofmthemfollowingmrepresentsmamdifference mbetween man mSmcorporation mand mamlimited mliability mcompany m(LLC)?
a. An mSmcorporation mcanmhavemmoremthanmonemtypemofmstockmoutstanding,mwhereasmanmLLCmcanmhavemonlymonem
typemof mstock moutstanding.
b. An mSmcorporation mcanmchoosemtombemtaxedmasmamcorporationmormasmampartnership,mwhereasmanmLLCmismtaxed
masma mcorporation monly.
c. An mSmcorporation mismsubjectmto munlimitedmpersonalmliability mofmthemowners,mwhereasman mLLCmismsubjectmto mli
mited mpersonalmliability.
d. An mSmcorporation mhasmnommoremthanm100mstockholders,mwhereasmanmLLCmcanmhavemmoremthanm
100 mstockholdersm(members).
e. An mSmcorporation'smbusinessmincomemismsubjectmto mdoublemtaxation,mwhereasman mLLC'smbusinessmincomemismta
xed monly monce.
ANSWER:m d
14. Which mof mthemfollowingmstatementsmismtruemof mcorporate mbylaws?
a. Corporate mbylawsmaremamsetmofmrulesmdrawnmup mbymthemstatemto menablemmanagersmto mrunmthemfirmmin maccor
dance mwith mstatemlaws.
b. Proceduresmformelectingmcorporate mdirectorsmaremcontained min mcorporate mbylaws.
c. Proceduresmthatmgovern mchangesmin mcorporate mbylawsmaremcontained min mthemcorporate mcharter.
d. To mopen mtheirmdoorsmandmstartmtheirmoperations,mcorporationsmaremlegallymrequiredmonlymto mfilemtheirmbylawsm
with mthemappropriate magency min mthemstatemwheremthey mincorporate.
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m m m m m m m m m
Name: Class: Date:
Chapter m01:mAnmOverviewmofmManagerialmFinance
1. Which mof mthemfollowingmstatementsmismcorrect? mAssume meverythingmelsemequal.
a. Riskiermassetsmalwaysmhavemhighermmarketmvalues.
b. Riskiermassetsmaremmoremvaluable mthan m(preferred mto)mlessmrisky massets.
c. Themsoonermcash mismreceived,mthemmoremvaluable mitmis.
d. Investorsmgenerally mprefermshort-term,mhigh-risk massetsminvestments.
e. Investorsmgenerally mreceive mhighermreturnsmon minvestmentsmwith mlowmrisk mthan minvestmentsmwith mhigh mrisk.
ANSWER:m c
2. Themsuccessmof mfinancialminstitutionsmdependsmon mthem .
a. understandingmofmthemfactorsmthatmcauseminterestmratesmand mothermreturnsmin mthemfinancialmmarketsmto mrisemand mfall
b. environmentally mresponsible mbehaviormof mthemshareholdersmof mcorporations
c. expectationsmof mlong-termminvestorsmin mthemcompany
d. awarenessmof mthemshareholdersmregardingmthemregulationsmthatmaffectmpublicmcorporations
e. priormknowledge mof mthemdecisionsmthatmpublic mcorporationsmmakemconcerningmtheirmcash mflows
ANSWER:m a
3. Which mof mthemfollowingmismtruemof mtheminvestmentmfunction mof mfinance?
a. Theminvestmentmfunction mfocusesmon msocially mresponsible mactionsmtaken mby mcorporations.
b. Theminvestmentmfunctionmfocusesmon mthemvalues,mrisks,mandmreturnsmassociatedmwithmfinancialmassetsmsuc
h masmstocksmand mbonds.
c. Theminvestmentmfunction mfocusesmon mthemoptimalmmix mof msecuritiesmbased mon mthemenvironment-
friendly mbehaviormof mthemcorporations.
d. Theminvestmentmfunction mfocusesmon mregulationsmapplicable mto mampublic mcorporation.
e. Theminvestmentmfunctionmfocusesmon madditionalminformationmaboutmthemproceduresmusedmto mconstructmand mre
portmfinancialmstatements.
ANSWER:m b
4. Identify mamtruemstatementmaboutmthemfinancialmservicesmprovided mby morganizations.
a. Financialmservicesmorganizationsminvestmonly min menvironmentally mresponsible mpublicmcorporations.
b. Financialmservicesmincludemservicesmprovided mby mbanksmand minsurance mcompaniesmonly.
c. Financialmservicesmorganizationsmmakeminvestmentmdecisionsmbasedmsolelymonmthemsociallymresponsiblembehav
iormof mcorporates.
d. Financialmservicesmorganizationsmprovidemcomparativemcashmflowmpositionsmofmcompetingmcorporations
mto minvestors mto mhelp mthem mwith minvestmentmdecisions.
e. Financialmservicesmorganizationsmhelpmindividualsmand mcompaniesmdeterminemhowmto minvestmmoney mtomachi
evemtheirmfinancialmgoals.
ANSWER:m e
5. Financialmservicesmrefermto mfunctionsmprovided mby morganizationsmthatm .
a. dealmwith mthemmostmefficientmmanagementmof mthemhuman mresources
b. ensure mthatmregulationsmof mthemSarbanes-Oxley mActmaremfollowed mby mpublicmcorporations
c. recommend mthemmostmenvironmentmfriendly mmethod mof moperationsmto mamcorporation
d. recommend mthemtypesmof msecuritiesmto mbemissued mto mfinance mplantmexpansions
e. dealmwith mthemmanagementmof mmoney
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, DOWNLOAD THE Test Bank for CFIN 7 7th Edition Besley
m m m m m m m m m
Name: Class: Date:
Chapter m01:mAnmOverviewmofmManagerialmFinance
ANSWER:m e
6. Which mof mthemfollowingmfunctionsmdealsmwith mthemmanagementmof mmoney?
a. Marketing
b. Human mresources
c. Financialmservices
d. Information msystems
e. Research mand mdevelopment
ANSWER:m c
7. Which mofmthemfollowingmismtruemofmfinancialmservicesmprovidedmbympersonsmworkingmin mbanks,minsurance mcompanies,
mand mbrokerage mfirms?
a. Personsmworkingmin mbanks,minsurancemcompanies,mand mbrokeragemfirmsmhelp mcorporationsmtomdecidemthemtype
smof msecuritiesmto mbemissued mto mfinance mplantmexpansion.
b. Personsmworkingmin mbanks,minsurancemcompanies,mandmbrokeragemfirmsmhelpmindividualsmand mcompan
iesmdetermine mhowmto minvestmmoney mto machieve mtheirmfinancialmgoals.
c. Personsmworkingmin mbanks,minsurancemcompanies,mand mbrokeragemfirmsmhelp mcorporationsmfulfillmthemregulati
onsmrequired mby mthemSarbanes-Oxley mAct.
d. Personsmworkingmin mbanks,minsurancemcompanies,mand mbrokeragemfirmsmhelp mpublicmcorporationsmfoll
owmenvironment-friendly mpractices.
e. Personsmworkingmin mbanks,minsurancemcompanies,mand mbrokeragemfirmsmhelp mcorporationsmin mframingmt
heirmbylaws.
ANSWER:m b
8. Which mof mthemfollowingmismtruemof mfinancialminstitutions?
a. Financialminstitutionsmaremthemregulatorsmof minterestmratesmand mothermreturnsmin mfinancialmmarkets.
b. Managersmofmfinancialminstitutionsmshould mhavemanmunderstandingmofmfactorsmthatmcauseminterestmratesmandmo
thermreturnsmin mthemfinancialmmarketsmto mrisemand mfall.
c. Financialminstitutionsmaremaccountablemandmresponsible min mreportingmfinancialminformation mformpublicly-
traded mcorporations.
d. Financialminstitutionsmaremrequired mby mthemSarbanes-Oxley mActmto mdisclose mthemenvironment-
friendly mmeasuresmtaken mby minvestmentmcorporations.
e. Financialminstitutionsmrequire mpublicmcorporationsmto madoptmsocially mresponsible mwork mpractices.
ANSWER:m b
9. Themtreasurermof mamcompany mismamkey msubordinate mof mthem .
a. controller
b. financialmvicempresident
c. chief mexecutive mofficer
d. creditmmanager
e. directormof mcapitalmbudgeting
ANSWER:m b
10. Themcreditmmanagermismsupervised mby mthem .
a. treasurer
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m m m m m m m m m
Name: Class: Date:
Chapter m01:mAnmOverviewmofmManagerialmFinance
b. inventory mmanager
c. directormof mcapitalmbudgeting
d. vicempresidentmof mfinance
e. controller
ANSWER:m a
11. Themaccountingmand mtax mdepartmentsmaremthemresponsibility mof mthem .
a. treasurer
b. inventory mmanager
c. directormof mcapitalmbudgeting
d. vicempresidentmof mfinance
e. controller
ANSWER:m e
12. Everythingmelsemequal,mincludingmfirmmsize,mdollarmsales,mtypemofmproductmsold,mandmsomforth,mthemprimarymdiffer
encembetween mproprietorship mand mpartnership mbusinessmformsmismthatm .
a. ampartnership mhasmmoremownersmthan mamproprietorship
b. themcombined mpersonalmliability massociatedmwithmampartnership mismsignificantlymlessmthanmthemcombinedmperso
nalmliability massociated mwith mamproprietorship
c. ampartnership mismgenerally measiermto mformmthan mamproprietorship
d. themannualmgrowth mratemofmamproprietorship mismlimitedmbymlaw,mwhereasmthemgrowthmratemofmampartnership mismal
waysmpotentially munlimited
e. many mmorembusinessesmaremformed masmpartnershipsmthan mproprietorships
ANSWER:m a
13. Which mofmthemfollowingmrepresentsmamdifference mbetween man mSmcorporation mand mamlimited mliability mcompany m(LLC)?
a. An mSmcorporation mcanmhavemmoremthanmonemtypemofmstockmoutstanding,mwhereasmanmLLCmcanmhavemonlymonem
typemof mstock moutstanding.
b. An mSmcorporation mcanmchoosemtombemtaxedmasmamcorporationmormasmampartnership,mwhereasmanmLLCmismtaxed
masma mcorporation monly.
c. An mSmcorporation mismsubjectmto munlimitedmpersonalmliability mofmthemowners,mwhereasman mLLCmismsubjectmto mli
mited mpersonalmliability.
d. An mSmcorporation mhasmnommoremthanm100mstockholders,mwhereasmanmLLCmcanmhavemmoremthanm
100 mstockholdersm(members).
e. An mSmcorporation'smbusinessmincomemismsubjectmto mdoublemtaxation,mwhereasman mLLC'smbusinessmincomemismta
xed monly monce.
ANSWER:m d
14. Which mof mthemfollowingmstatementsmismtruemof mcorporate mbylaws?
a. Corporate mbylawsmaremamsetmofmrulesmdrawnmup mbymthemstatemto menablemmanagersmto mrunmthemfirmmin maccor
dance mwith mstatemlaws.
b. Proceduresmformelectingmcorporate mdirectorsmaremcontained min mcorporate mbylaws.
c. Proceduresmthatmgovern mchangesmin mcorporate mbylawsmaremcontained min mthemcorporate mcharter.
d. To mopen mtheirmdoorsmandmstartmtheirmoperations,mcorporationsmaremlegallymrequiredmonlymto mfilemtheirmbylawsm
with mthemappropriate magency min mthemstatemwheremthey mincorporate.
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