Test Bank for
ii ii
Finance iiApplications iiand iiTheory ii6e iiCornett
Chapter 1- Answers are at the end of Each
ii ii ii ii ii ii ii
20 chapter ii
Chapter 1 ii
Student name: ii ii
1) Which iistatements(s) iiis/are iitrue iifor iisuccessful iiapplication iiof iifinancial iitheories?
A) The iieconomy iiwill iibe iimore iiproductive.
B) Individual’s iiwealth iiwill iigrow.
C) The iieconomy iiwill iibe iimore iiproductive iiand iiindividual's iiwealth iiwill iigrow.
D) None iiof iithese iichoices iiare iicorrect.
2) Not iiall iicash iia iicompany iigenerates iiwill iibe iireturned iito iithe iiinvestors. iiWhich iiof
iithe iifollowing i i will iiNOT iireduce iithe iiamount iiof iicapital iireturned iito iithe
iiinvestors?
A) retained iiearnings
B) taxes
C) dividends
3) This iisubarea iiof iifinance iiinvolves iimethods iiand iitechniques iito iimake iiappropriate
iidecisions i i about iiwhat iikinds iiof iisecurities iito iiown, iiwhich iifirms' iisecurities iito
iibuy, iiand iihow iito iibe iipaid iiback i i in iithe iiform iithat iithe iiinvestor iiwishes.
A) real iimarkets
B) investments
C) financial iimanagement
4) This iisubarea iiof iifinance iilooks iiat iifirm iidecisions iiin iiacquiring iiand iiutilizing iicash
received iifrom i i investors iior iifrom iiretained iiearnings.
ii
A) investments
B) financial iimanagement
C) financial iiinstitutions iiand iimarkets
,5) Financial iimanagement iiinvolves iidecisions iiabout iiwhich iiof iithe iifollowing?
A) Which iiprojects iito iifund
B) How iito iiminimize iitaxation
C) What iitype iiof iicapital iishould iibe iiraised
D) All iiof iithese iichoices iiare iicorrect.
6) This iisubarea iiof iifinance iihelps iifacilitate iithe iicapital iiflows iibetween iiinvestors iiand
companies.
ii
A) investments
B) financial iimanagement
C) treasury iimanagement
D) financial iiinstitutions iiand iimarkets
7) This iisubarea iiof iifinance iiis iiimportant iifor iiadapting iito iithe iiglobal iieconomy.
A) investments
B) financial iimanagement
C) international iifinance
D) financial iiinstitutions iiand iimarkets
8) A iipotential iifuture iinegative iiimpact iito iivalue iiand/or iicash iiflows iiis iioften
iidiscussed iiin iiterms iiof i i probability iiof iiloss iiand iithe iiexpected iimagnitude iiof
iithe iiloss. iiThis iiis iicalled
A) options.
B) standard iideviation.
C) coefficient iiof iivariation.
D) risk.
9) This iiis iia iiterm iito iidescribe iinon-physical iiassets iilike iistocks iiand iibonds iithat iiget
their iivalue iifrom i i future iicash iiflows.
ii
A) investment
B) financial iiasset
C) real iiasset
D) financial iimarkets
,10) Which iiof iithe iifollowing iiis iidefined iias iia iigroup iiof iisecurities iithat iiexhibit iisimilar
iicharacteristics, i i behave iisimilarly iiin iithe iimarketplace, iiand iiare iisubject iito iithe
iisame iilaws iiand iiregulations?
A) investments
B) asset iiclasses
C) market iiinstruments
D) financial iimarkets
11) The iimost iicommonly iiaccepted iigroups iiof iiasset iiclasses iiinclude iiall iiof iithe iifollowing
except
ii
A) stocks.
B) bonds.
C) machinery iiand iiequipment.
D) real iiestate.
12) The is iithe iiinterest iirate iiat iiwhich iibanks iiand iiother iidepository
iiinstitutions iilend i i reserve iibalances iito iione iianother iiovernight; iithis iirate iiheavily
iiinfluences iiother iishort-term iirates.
A) average iitax iirate
B) exchange iirate
C) federal iifunds iirate
D) none iiof iithese iichoices iiare iicorrect.
13) Which iiof iithe iifollowing iistatements iiregarding iiquantitative iieasing ii(QE) iiare iitrue?
A) QE iiis iia iimonetary iipolicy iidesigned iito iiincrease iithe iimoney iisupply iiin
the iieconomy i i through iibuying iisecurities iiin iithe iimarket iiand
ii
iilowering iishort-term iiinterest iirates.
B) The iifirst iiround iiof iiQE iiinvolved iithe iiFed iito iipurchase iipotentially iitoxic
iimortgage-backed i i securities iifrom iibanks.
C) During iiearly ii2020 iidue iito iithe iiCOVID-19 iipandemic, iithe iiFed iidropped iithe
iifederal iifunds i i rate iito ii1.25% iiand iithen iiagain ii0.25 iia iifew iimonths iilater.
D) All iiof iithese iichoices iiare iicorrect.
14) Which iiof iithe iifollowing iiis iithe iifirm's iihighest-level iifinancial iimanager?
A) chief iiexecutive iiofficer
B) chief iifinancial iiofficer
C) board iiof iidirectors
D) corporate iigovernance
, 15) Which iiof iithe iifollowing iimanagers iiwould iiNOT iiuse iifinance iiprimarily?
A) operational iimanagers
B) marketing iimanagers
C) human iiresource iimanagers
D) all iiof iithese iichoices iiare iicorrect.
16) Which iiof iithe iifollowing iipersonal iidecisions iiis iiimpacted iiby iifinance?
A) borrowing iimoney iito iipurchase iicars iior iihomes
B) making iicredit iicard iipayments
C) making iiretirement iidecisions
D) all iiof iithese iichoices iiare iicorrect.
17) When iidetermining iia iiform iiof iibusiness iiorganization, iiall iiof iithe iifollowing iiare
considered
ii
EXCEPT
A) who iiowns iithe iifirm.
B) the iiowners' iirisks.
C) the iitax iiramifications.
D) the iiphysical iilocation iiof iithe iibusiness.
18) This iitype iiof iibusiness iiorganization iiis iirelatively iieasy iito iistart, iiand iiit iiis iisubject
iito iimuch iilighter i i regulatory iiand iipaperwork iiburden iithan iiother iibusiness
iiforms.
A) sole iiproprietorship
B) partnership
C) corporation
D) hybrid iiorganization
19) This iitype iiof iibusiness iiorganization iiis iientirely iilegally iiindependent iifrom iiits
owners.
ii
A) sole iiproprietorship
B) partnership
C) public iicorporations
D) hybrid iiorganizations
ii ii
Finance iiApplications iiand iiTheory ii6e iiCornett
Chapter 1- Answers are at the end of Each
ii ii ii ii ii ii ii
20 chapter ii
Chapter 1 ii
Student name: ii ii
1) Which iistatements(s) iiis/are iitrue iifor iisuccessful iiapplication iiof iifinancial iitheories?
A) The iieconomy iiwill iibe iimore iiproductive.
B) Individual’s iiwealth iiwill iigrow.
C) The iieconomy iiwill iibe iimore iiproductive iiand iiindividual's iiwealth iiwill iigrow.
D) None iiof iithese iichoices iiare iicorrect.
2) Not iiall iicash iia iicompany iigenerates iiwill iibe iireturned iito iithe iiinvestors. iiWhich iiof
iithe iifollowing i i will iiNOT iireduce iithe iiamount iiof iicapital iireturned iito iithe
iiinvestors?
A) retained iiearnings
B) taxes
C) dividends
3) This iisubarea iiof iifinance iiinvolves iimethods iiand iitechniques iito iimake iiappropriate
iidecisions i i about iiwhat iikinds iiof iisecurities iito iiown, iiwhich iifirms' iisecurities iito
iibuy, iiand iihow iito iibe iipaid iiback i i in iithe iiform iithat iithe iiinvestor iiwishes.
A) real iimarkets
B) investments
C) financial iimanagement
4) This iisubarea iiof iifinance iilooks iiat iifirm iidecisions iiin iiacquiring iiand iiutilizing iicash
received iifrom i i investors iior iifrom iiretained iiearnings.
ii
A) investments
B) financial iimanagement
C) financial iiinstitutions iiand iimarkets
,5) Financial iimanagement iiinvolves iidecisions iiabout iiwhich iiof iithe iifollowing?
A) Which iiprojects iito iifund
B) How iito iiminimize iitaxation
C) What iitype iiof iicapital iishould iibe iiraised
D) All iiof iithese iichoices iiare iicorrect.
6) This iisubarea iiof iifinance iihelps iifacilitate iithe iicapital iiflows iibetween iiinvestors iiand
companies.
ii
A) investments
B) financial iimanagement
C) treasury iimanagement
D) financial iiinstitutions iiand iimarkets
7) This iisubarea iiof iifinance iiis iiimportant iifor iiadapting iito iithe iiglobal iieconomy.
A) investments
B) financial iimanagement
C) international iifinance
D) financial iiinstitutions iiand iimarkets
8) A iipotential iifuture iinegative iiimpact iito iivalue iiand/or iicash iiflows iiis iioften
iidiscussed iiin iiterms iiof i i probability iiof iiloss iiand iithe iiexpected iimagnitude iiof
iithe iiloss. iiThis iiis iicalled
A) options.
B) standard iideviation.
C) coefficient iiof iivariation.
D) risk.
9) This iiis iia iiterm iito iidescribe iinon-physical iiassets iilike iistocks iiand iibonds iithat iiget
their iivalue iifrom i i future iicash iiflows.
ii
A) investment
B) financial iiasset
C) real iiasset
D) financial iimarkets
,10) Which iiof iithe iifollowing iiis iidefined iias iia iigroup iiof iisecurities iithat iiexhibit iisimilar
iicharacteristics, i i behave iisimilarly iiin iithe iimarketplace, iiand iiare iisubject iito iithe
iisame iilaws iiand iiregulations?
A) investments
B) asset iiclasses
C) market iiinstruments
D) financial iimarkets
11) The iimost iicommonly iiaccepted iigroups iiof iiasset iiclasses iiinclude iiall iiof iithe iifollowing
except
ii
A) stocks.
B) bonds.
C) machinery iiand iiequipment.
D) real iiestate.
12) The is iithe iiinterest iirate iiat iiwhich iibanks iiand iiother iidepository
iiinstitutions iilend i i reserve iibalances iito iione iianother iiovernight; iithis iirate iiheavily
iiinfluences iiother iishort-term iirates.
A) average iitax iirate
B) exchange iirate
C) federal iifunds iirate
D) none iiof iithese iichoices iiare iicorrect.
13) Which iiof iithe iifollowing iistatements iiregarding iiquantitative iieasing ii(QE) iiare iitrue?
A) QE iiis iia iimonetary iipolicy iidesigned iito iiincrease iithe iimoney iisupply iiin
the iieconomy i i through iibuying iisecurities iiin iithe iimarket iiand
ii
iilowering iishort-term iiinterest iirates.
B) The iifirst iiround iiof iiQE iiinvolved iithe iiFed iito iipurchase iipotentially iitoxic
iimortgage-backed i i securities iifrom iibanks.
C) During iiearly ii2020 iidue iito iithe iiCOVID-19 iipandemic, iithe iiFed iidropped iithe
iifederal iifunds i i rate iito ii1.25% iiand iithen iiagain ii0.25 iia iifew iimonths iilater.
D) All iiof iithese iichoices iiare iicorrect.
14) Which iiof iithe iifollowing iiis iithe iifirm's iihighest-level iifinancial iimanager?
A) chief iiexecutive iiofficer
B) chief iifinancial iiofficer
C) board iiof iidirectors
D) corporate iigovernance
, 15) Which iiof iithe iifollowing iimanagers iiwould iiNOT iiuse iifinance iiprimarily?
A) operational iimanagers
B) marketing iimanagers
C) human iiresource iimanagers
D) all iiof iithese iichoices iiare iicorrect.
16) Which iiof iithe iifollowing iipersonal iidecisions iiis iiimpacted iiby iifinance?
A) borrowing iimoney iito iipurchase iicars iior iihomes
B) making iicredit iicard iipayments
C) making iiretirement iidecisions
D) all iiof iithese iichoices iiare iicorrect.
17) When iidetermining iia iiform iiof iibusiness iiorganization, iiall iiof iithe iifollowing iiare
considered
ii
EXCEPT
A) who iiowns iithe iifirm.
B) the iiowners' iirisks.
C) the iitax iiramifications.
D) the iiphysical iilocation iiof iithe iibusiness.
18) This iitype iiof iibusiness iiorganization iiis iirelatively iieasy iito iistart, iiand iiit iiis iisubject
iito iimuch iilighter i i regulatory iiand iipaperwork iiburden iithan iiother iibusiness
iiforms.
A) sole iiproprietorship
B) partnership
C) corporation
D) hybrid iiorganization
19) This iitype iiof iibusiness iiorganization iiis iientirely iilegally iiindependent iifrom iiits
owners.
ii
A) sole iiproprietorship
B) partnership
C) public iicorporations
D) hybrid iiorganizations
