Chapter 1- Answers are at the end of Each
i i i i i i
Chapter 1
Student name:
1) Which statements(s) is/are true for successful application of financial theories?
A) The economy will be more productive.
B) Individual’s wealth will grow.
C) The economy will be more productive and individual's wealth will grow.
D) None of these choices are correct.
2) Not all cash a company generates will be returned to the investors. Which of
the following will NOT reduce the amount of capital returned to the
investors?
A) retained earnings
B) taxes
C) dividends
3) This subarea of finance involves methods and techniques to make appropriate
decisions about what kinds of securities to own, which firms' securities to buy,
and how to be paid back in the form that the investor wishes.
A) real markets
B) investments
C) financial management
4) This subarea of finance looks at firm decisions in acquiring and utilizing cash
received from investors or from retained earnings.
A) investments
B) financial management
C) financial institutions and markets
,5) Financial management involves decisions about which of the following?
A) Which projects to fund
B) How to minimize taxation
C) What type of capital should be raised
D) All of these choices are correct.
6) This subarea of finance helps facilitate the capital flows between investors and
companies.
A) investments
B) financial management
C) treasury management
D) financial institutions and markets
7) This subarea of finance is important for adapting to the global economy.
A) investments
B) financial management
C) international finance
D) financial institutions and markets
8) A potential future negative impact to value and/or cash flows is often discussed
in terms of probability of loss and the expected magnitude of the loss. This is
called
A) options.
B) standard deviation.
C) coefficient of variation.
D) risk.
9) This is a term to describe non-physical assets like stocks and bonds that get their
value from future cash flows.
A) investment
B) financial asset
C) real asset
D) financial markets
,10) Which of the following is defined as a group of securities that exhibit similar
characteristics, behave similarly in the marketplace, and are subject to the same
laws and regulations?
A) investments
B) asset classes
C) market instruments
D) financial markets
11) The most commonly accepted groups of asset classes include all of the following
except
A) stocks.
B) bonds.
C) machinery and equipment.
D) real estate.
12) The is the interest rate at which banks and other depository institutions
lend reserve balances to one another overnight; this rate heavily influences other
short-term rates.
A) average tax rate
B) exchange rate
C) federal funds rate
D) none of these choices are correct.
13) Which of the following statements regarding quantitative easing (QE) are true?
A) QE is a monetary policy designed to increase the money supply in the
economy through buying securities in the market and lowering
short-term interest rates.
B) The first round of QE involved the Fed to purchase potentially toxic
mortgage-backed securities from banks.
C) During early 2020 due to the COVID-19 pandemic, the Fed dropped the
federal funds rate to 1.25% and then again 0.25 a few months later.
D) All of these choices are correct.
14) Which of the following is the firm's highest-level financial manager?
A) chief executive officer
B) chief financial officer
C) board of directors
D) corporate governance
, 15) Which of the following managers would NOT use finance primarily?
A) operational managers
B) marketing managers
C) human resource managers
D) all of these choices are correct.
16) Which of the following personal decisions is impacted by finance?
A) borrowing money to purchase cars or homes
B) making credit card payments
C) making retirement decisions
D) all of these choices are correct.
17) When determining a form of business organization, all of the following are
considered
EXCEPT
A) who owns the firm.
B) the owners' risks.
C) the tax ramifications.
D) the physical location of the business.
18) This type of business organization is relatively easy to start, and it is subject to
much lighter regulatory and paperwork burden than other business forms.
A) sole proprietorship
B) partnership
C) corporation
D) hybrid organization
19) This type of business organization is entirely legally independent from its owners.
A) sole proprietorship
B) partnership
C) public corporations
D) hybrid organizations
i i i i i i
Chapter 1
Student name:
1) Which statements(s) is/are true for successful application of financial theories?
A) The economy will be more productive.
B) Individual’s wealth will grow.
C) The economy will be more productive and individual's wealth will grow.
D) None of these choices are correct.
2) Not all cash a company generates will be returned to the investors. Which of
the following will NOT reduce the amount of capital returned to the
investors?
A) retained earnings
B) taxes
C) dividends
3) This subarea of finance involves methods and techniques to make appropriate
decisions about what kinds of securities to own, which firms' securities to buy,
and how to be paid back in the form that the investor wishes.
A) real markets
B) investments
C) financial management
4) This subarea of finance looks at firm decisions in acquiring and utilizing cash
received from investors or from retained earnings.
A) investments
B) financial management
C) financial institutions and markets
,5) Financial management involves decisions about which of the following?
A) Which projects to fund
B) How to minimize taxation
C) What type of capital should be raised
D) All of these choices are correct.
6) This subarea of finance helps facilitate the capital flows between investors and
companies.
A) investments
B) financial management
C) treasury management
D) financial institutions and markets
7) This subarea of finance is important for adapting to the global economy.
A) investments
B) financial management
C) international finance
D) financial institutions and markets
8) A potential future negative impact to value and/or cash flows is often discussed
in terms of probability of loss and the expected magnitude of the loss. This is
called
A) options.
B) standard deviation.
C) coefficient of variation.
D) risk.
9) This is a term to describe non-physical assets like stocks and bonds that get their
value from future cash flows.
A) investment
B) financial asset
C) real asset
D) financial markets
,10) Which of the following is defined as a group of securities that exhibit similar
characteristics, behave similarly in the marketplace, and are subject to the same
laws and regulations?
A) investments
B) asset classes
C) market instruments
D) financial markets
11) The most commonly accepted groups of asset classes include all of the following
except
A) stocks.
B) bonds.
C) machinery and equipment.
D) real estate.
12) The is the interest rate at which banks and other depository institutions
lend reserve balances to one another overnight; this rate heavily influences other
short-term rates.
A) average tax rate
B) exchange rate
C) federal funds rate
D) none of these choices are correct.
13) Which of the following statements regarding quantitative easing (QE) are true?
A) QE is a monetary policy designed to increase the money supply in the
economy through buying securities in the market and lowering
short-term interest rates.
B) The first round of QE involved the Fed to purchase potentially toxic
mortgage-backed securities from banks.
C) During early 2020 due to the COVID-19 pandemic, the Fed dropped the
federal funds rate to 1.25% and then again 0.25 a few months later.
D) All of these choices are correct.
14) Which of the following is the firm's highest-level financial manager?
A) chief executive officer
B) chief financial officer
C) board of directors
D) corporate governance
, 15) Which of the following managers would NOT use finance primarily?
A) operational managers
B) marketing managers
C) human resource managers
D) all of these choices are correct.
16) Which of the following personal decisions is impacted by finance?
A) borrowing money to purchase cars or homes
B) making credit card payments
C) making retirement decisions
D) all of these choices are correct.
17) When determining a form of business organization, all of the following are
considered
EXCEPT
A) who owns the firm.
B) the owners' risks.
C) the tax ramifications.
D) the physical location of the business.
18) This type of business organization is relatively easy to start, and it is subject to
much lighter regulatory and paperwork burden than other business forms.
A) sole proprietorship
B) partnership
C) corporation
D) hybrid organization
19) This type of business organization is entirely legally independent from its owners.
A) sole proprietorship
B) partnership
C) public corporations
D) hybrid organizations
