TEST BANK FOR
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FINANCE iAPPLICATIONS iAND iTHEORY i6E iCORNETT
Chapter 1- Answers are at the end of Each
i i i i i i i
20 chapter i
Chapter 1 i
Student name:i i
1) Which istatements(s) iis/are itrue ifor isuccessful iapplication iof ifinancial itheories?
A) The ieconomy iwill ibe imore iproductive.
B) Individual’s iwealth iwill igrow.
C) The ieconomy iwill ibe imore iproductive iand iindividual's iwealth iwill igrow.
D) None iof ithese ichoices iare icorrect.
2) Not iall icash ia icompany igenerates iwill ibe ireturned ito ithe iinvestors. iWhich iof
ithe ifollowing i will iNOT ireduce ithe iamount iof icapital ireturned ito ithe
iinvestors?
A) retained iearnings
B) taxes
C) dividends
3) This isubarea iof ifinance iinvolves imethods iand itechniques ito imake iappropriate
idecisions i about iwhat ikinds iof isecurities ito iown, iwhich ifirms' isecurities ito ibuy,
iand ihow ito ibe ipaid iback i in ithe iform ithat ithe iinvestor iwishes.
A) real imarkets
B) investments
C) financial imanagement
4) This isubarea iof ifinance ilooks iat ifirm idecisions iin iacquiring iand iutilizing icash
ireceived ifrom i investors ior ifrom iretained iearnings.
A) investments
B) financial imanagement
C) financial iinstitutions iand imarkets
,5) Financial imanagement iinvolves idecisions iabout iwhich iof ithe ifollowing?
A) Which iprojects ito ifund
B) How ito iminimize itaxation
C) What itype iof icapital ishould ibe iraised
D) All iof ithese ichoices iare icorrect.
6) This isubarea iof ifinance ihelps ifacilitate ithe icapital iflows ibetween iinvestors iand
icompanies.
A) investments
B) financial imanagement
C) treasury imanagement
D) financial iinstitutions iand imarkets
7) This isubarea iof ifinance iis iimportant ifor iadapting ito ithe iglobal ieconomy.
A) investments
B) financial imanagement
C) international ifinance
D) financial iinstitutions iand imarkets
8) A ipotential ifuture inegative iimpact ito ivalue iand/or icash iflows iis ioften idiscussed
iin iterms iof i probability iof iloss iand ithe iexpected imagnitude iof ithe iloss. iThis iis
icalled
A) options.
B) standard ideviation.
C) coefficient iof ivariation.
D) risk.
9) This iis ia iterm ito idescribe inon-physical iassets ilike istocks iand ibonds ithat iget itheir
ivalue ifrom i future icash iflows.
A) investment
B) financial iasset
C) real iasset
D) financial imarkets
,10) Which iof ithe ifollowing iis idefined ias ia igroup iof isecurities ithat iexhibit isimilar
icharacteristics, i behave isimilarly iin ithe imarketplace, iand iare isubject ito ithe isame
ilaws iand iregulations?
A) investments
B) asset iclasses
C) market iinstruments
D) financial imarkets
11) The imost icommonly iaccepted igroups iof iasset iclasses iinclude iall iof ithe ifollowing
iexcept
A) stocks.
B) bonds.
C) machinery iand iequipment.
D) real iestate.
12) The is ithe iinterest irate iat iwhich ibanks iand iother idepository iinstitutions
ilend i reserve ibalances ito ione ianother iovernight; ithis irate iheavily iinfluences iother
ishort-term irates.
A) average itax irate
B) exchange irate
C) federal ifunds irate
D) none iof ithese ichoices iare icorrect.
13) Which iof ithe ifollowing istatements iregarding iquantitative ieasing i(QE) iare itrue?
A) QE iis ia imonetary ipolicy idesigned ito iincrease ithe imoney isupply iin ithe
economy i through ibuying isecurities iin ithe imarket iand ilowering
i
ishort-term iinterest irates.
B) The ifirst iround iof iQE iinvolved ithe iFed ito ipurchase ipotentially itoxic
imortgage-backed i securities ifrom ibanks.
C) During iearly i2020 idue ito ithe iCOVID-19 ipandemic, ithe iFed idropped ithe
ifederal ifunds i rate ito i1.25% iand ithen iagain i0.25 ia ifew imonths ilater.
D) All iof ithese ichoices iare icorrect.
14) Which iof ithe ifollowing iis ithe ifirm's ihighest-level ifinancial imanager?
A) chief iexecutive iofficer
B) chief ifinancial iofficer
C) board iof idirectors
D) corporate igovernance
, 15) Which iof ithe ifollowing imanagers iwould iNOT iuse ifinance iprimarily?
A) operational imanagers
B) marketing imanagers
C) human iresource imanagers
D) all iof ithese ichoices iare icorrect.
16) Which iof ithe ifollowing ipersonal idecisions iis iimpacted iby ifinance?
A) borrowing imoney ito ipurchase icars ior ihomes
B) making icredit icard ipayments
C) making iretirement idecisions
D) all iof ithese ichoices iare icorrect.
17) When idetermining ia iform iof ibusiness iorganization, iall iof ithe ifollowing iare
considered
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EXCEPT
A) who iowns ithe ifirm.
B) the iowners' irisks.
C) the itax iramifications.
D) the iphysical ilocation iof ithe ibusiness.
18) This itype iof ibusiness iorganization iis irelatively ieasy ito istart, iand iit iis isubject ito
much ilighter i regulatory iand ipaperwork iburden ithan iother ibusiness iforms.
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A) sole iproprietorship
B) partnership
C) corporation
D) hybrid iorganization
19) This itype iof ibusiness iorganization iis ientirely ilegally iindependent ifrom iits iowners.
A) sole iproprietorship
B) partnership
C) public icorporations
D) hybrid iorganizations
i i
FINANCE iAPPLICATIONS iAND iTHEORY i6E iCORNETT
Chapter 1- Answers are at the end of Each
i i i i i i i
20 chapter i
Chapter 1 i
Student name:i i
1) Which istatements(s) iis/are itrue ifor isuccessful iapplication iof ifinancial itheories?
A) The ieconomy iwill ibe imore iproductive.
B) Individual’s iwealth iwill igrow.
C) The ieconomy iwill ibe imore iproductive iand iindividual's iwealth iwill igrow.
D) None iof ithese ichoices iare icorrect.
2) Not iall icash ia icompany igenerates iwill ibe ireturned ito ithe iinvestors. iWhich iof
ithe ifollowing i will iNOT ireduce ithe iamount iof icapital ireturned ito ithe
iinvestors?
A) retained iearnings
B) taxes
C) dividends
3) This isubarea iof ifinance iinvolves imethods iand itechniques ito imake iappropriate
idecisions i about iwhat ikinds iof isecurities ito iown, iwhich ifirms' isecurities ito ibuy,
iand ihow ito ibe ipaid iback i in ithe iform ithat ithe iinvestor iwishes.
A) real imarkets
B) investments
C) financial imanagement
4) This isubarea iof ifinance ilooks iat ifirm idecisions iin iacquiring iand iutilizing icash
ireceived ifrom i investors ior ifrom iretained iearnings.
A) investments
B) financial imanagement
C) financial iinstitutions iand imarkets
,5) Financial imanagement iinvolves idecisions iabout iwhich iof ithe ifollowing?
A) Which iprojects ito ifund
B) How ito iminimize itaxation
C) What itype iof icapital ishould ibe iraised
D) All iof ithese ichoices iare icorrect.
6) This isubarea iof ifinance ihelps ifacilitate ithe icapital iflows ibetween iinvestors iand
icompanies.
A) investments
B) financial imanagement
C) treasury imanagement
D) financial iinstitutions iand imarkets
7) This isubarea iof ifinance iis iimportant ifor iadapting ito ithe iglobal ieconomy.
A) investments
B) financial imanagement
C) international ifinance
D) financial iinstitutions iand imarkets
8) A ipotential ifuture inegative iimpact ito ivalue iand/or icash iflows iis ioften idiscussed
iin iterms iof i probability iof iloss iand ithe iexpected imagnitude iof ithe iloss. iThis iis
icalled
A) options.
B) standard ideviation.
C) coefficient iof ivariation.
D) risk.
9) This iis ia iterm ito idescribe inon-physical iassets ilike istocks iand ibonds ithat iget itheir
ivalue ifrom i future icash iflows.
A) investment
B) financial iasset
C) real iasset
D) financial imarkets
,10) Which iof ithe ifollowing iis idefined ias ia igroup iof isecurities ithat iexhibit isimilar
icharacteristics, i behave isimilarly iin ithe imarketplace, iand iare isubject ito ithe isame
ilaws iand iregulations?
A) investments
B) asset iclasses
C) market iinstruments
D) financial imarkets
11) The imost icommonly iaccepted igroups iof iasset iclasses iinclude iall iof ithe ifollowing
iexcept
A) stocks.
B) bonds.
C) machinery iand iequipment.
D) real iestate.
12) The is ithe iinterest irate iat iwhich ibanks iand iother idepository iinstitutions
ilend i reserve ibalances ito ione ianother iovernight; ithis irate iheavily iinfluences iother
ishort-term irates.
A) average itax irate
B) exchange irate
C) federal ifunds irate
D) none iof ithese ichoices iare icorrect.
13) Which iof ithe ifollowing istatements iregarding iquantitative ieasing i(QE) iare itrue?
A) QE iis ia imonetary ipolicy idesigned ito iincrease ithe imoney isupply iin ithe
economy i through ibuying isecurities iin ithe imarket iand ilowering
i
ishort-term iinterest irates.
B) The ifirst iround iof iQE iinvolved ithe iFed ito ipurchase ipotentially itoxic
imortgage-backed i securities ifrom ibanks.
C) During iearly i2020 idue ito ithe iCOVID-19 ipandemic, ithe iFed idropped ithe
ifederal ifunds i rate ito i1.25% iand ithen iagain i0.25 ia ifew imonths ilater.
D) All iof ithese ichoices iare icorrect.
14) Which iof ithe ifollowing iis ithe ifirm's ihighest-level ifinancial imanager?
A) chief iexecutive iofficer
B) chief ifinancial iofficer
C) board iof idirectors
D) corporate igovernance
, 15) Which iof ithe ifollowing imanagers iwould iNOT iuse ifinance iprimarily?
A) operational imanagers
B) marketing imanagers
C) human iresource imanagers
D) all iof ithese ichoices iare icorrect.
16) Which iof ithe ifollowing ipersonal idecisions iis iimpacted iby ifinance?
A) borrowing imoney ito ipurchase icars ior ihomes
B) making icredit icard ipayments
C) making iretirement idecisions
D) all iof ithese ichoices iare icorrect.
17) When idetermining ia iform iof ibusiness iorganization, iall iof ithe ifollowing iare
considered
i
EXCEPT
A) who iowns ithe ifirm.
B) the iowners' irisks.
C) the itax iramifications.
D) the iphysical ilocation iof ithe ibusiness.
18) This itype iof ibusiness iorganization iis irelatively ieasy ito istart, iand iit iis isubject ito
much ilighter i regulatory iand ipaperwork iburden ithan iother ibusiness iforms.
i
A) sole iproprietorship
B) partnership
C) corporation
D) hybrid iorganization
19) This itype iof ibusiness iorganization iis ientirely ilegally iindependent ifrom iits iowners.
A) sole iproprietorship
B) partnership
C) public icorporations
D) hybrid iorganizations
