TEST BANK FOR Foundations of Finance, 10th edition by J. Keown, John D. Martin ISBN:9780134897264 COMPLETE GUIDE ALL CHAPTERS COVERED 100% VERIFIED A+ GRADE ASSURED!!!!!NEW LATEST UPDATE!!!!!!

,Foundations of Finance, 10e (Keown/Martin/Petty) br br br br




Chapter 1 An Introduction to the Foundations of Financial Management
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Learning Objective 1.1 br br




1) Financial management deals with the maintenance and creation of economic value or wealth.
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Answer: TRUE b r




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Keywords: Financial Management Learnin br br br




g Obj.: L.O. 1.1
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AACSB: Reflective Thinking b r br




2) Each financial decision made by a corporate manager can be evaluated by its direct impact on the c
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orporation's stock price. br br




Answer: FALSE Dif br br




f: 1 br Page Ref: 4 br br




Keywords: Goal of the Firm L br br br br br




earning Obj.: L.O. 1.1 AACS br br br br




B: Reflective Thinking
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3) The fundamental goal of a business is to maximize the retained earnings available to the corporation's s
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hareholders.
Answer: FALSE Dif br br




f: 1 br Page Ref: 3 br br




Keywords: Goal of the Firm L br br br br br




earning Obj.: L.O. 1.1 AACS br br br br




B: Reflective Thinking
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4) Shareholder wealth maximization means maximizing the price of the existing common stock.
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Answer: TRUE b r




Diff: 1 br Page Ref: 3 br br




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,Keywords: Shareholder Wealth, Goal of the Firm Lear
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ning Obj.: L.O. 1.1
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AACSB: Reflective Thinking b r br




5) It is important to evaluate a corporate manager's financial decision by measuring the effect the decision
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should have on the corporation's stock price if everything else were held constant. Ans
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wer: TRUE b r




Diff: 2 br Page Ref: 4 br br




Keywords: Goal of the Firm, Maximize Shareholder Wealth Learnin
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g Obj.: L.O. 1.1
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AACSB: Reflective Thinking b r br




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, 6) Corporate managers should accept investment projects that maximize profits in the short run because
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of the time value of money.
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Answer: FALSE Dif br br




f: 2 br Page Ref: 4 br br




Keywords: Goal of the Firm, Profits, Time Value of Money Learning
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Obj.: L.O. 1.1
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AACSB: Reflective Thinking b r br




7) The goal of the firm's financial managers should be the maximization of the total value of the firm's s
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tock.
Answer: TRUE Dif b r br




f: 1 br Page Ref: 3 br br




Keywords: Goal of the Firm L br br br br br




earning Obj.: L.O. 1.1 AACS br br br br




B: Reflective Thinking
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8) The payment of a dividend to current shareholders will have no impact on a corporation's share price b
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ecause the cash paid is not available to future potential shareholders who may want to buy the corporati
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on's stock. br




Answer: FALSE Dif br br




f: 1 br Page Ref: 4 br br




Keywords: Goal of the Firm L br br br br br




earning Obj.: L.O. 1.1 AACS br br br br




B: Reflective Thinking
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9) One problem with maximization of shareholder wealth as a goal is that it ignores risk taken by the f
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irm's financial decisions.
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Answer: FALSE Dif br br




f: 1 br Page Ref: 4 br br




Keywords: Goal of the Firm L br br br br br




earning Obj.: L.O. 1.1 AACS br br br br




B: Reflective Thinking
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