Contemporary Financial Management 14th Edition Moyer Test Bank
MULTIPLE CHOICE
1 : The primary objective of the firm is .
A : shareholder wealth maximization
B : social responsibility
C : long-run survival
D : profit maximization
Correct Answer : A
- : The shareholder wealth maximization goal states that management should seek to maximize
the of the expected future returns to the owners of the firm.
A : future value
B : compound value
C : percentage value
D : present value
Correct Answer : D
- : Financial managers can take a variety of actions to influence the market value of a
companys stock. All of the following are classifications of actions taken EXCEPT decisions.
A : investing
B : financing
C : dividend
D : tax implication
Correct Answer : D
- : Shareholder wealth is measured by the value of the shareholders common stock
holdings.
A : book
B : market
C : historic
D : compound
Correct Answer : B
- : The limitations of the profit maximization goal include which of the following?
A : It lacks a time dimension (i.e., it is static).
B : It fails to consider risk with alternative decisions.
C : The definition of profit is ambiguous.
D : All the above are limitations.
Correct Answer : D
- : The objective of maximizing shareholder wealth, as measured by the market value of the
firms stock, .A : does not consider the timing of the benefits received 1 / 4
B : provides a way to consider the risk of the benefits expected
C : benefits only certain stockholders
D : does not provide a standard against which to judge actual decisions
Correct Answer : B
- : The two most important disciplines on which financial management relies are .
A : accounting and production
B : accounting and marketing
C : economics and marketing
D : accounting and economics
Correct Answer : D
- : Which of the following is NOT a professional certification for careers in the field of finance?
A : Certified Financial Manager (CFM)
B : Certified Financial Planner (CFP)
C : Certified Financial Analyst (CFA)
D : Certified Treasury Professional (CTP)
Correct Answer : C
- : When considering the risk of receiving cash flows, financial managers must be aware that
investors .
A : want higher returns for perceived greater risk
B : want a lower valued firm to discourage future investors which might dilute their existing control C : expect dividends and capital gains regardless of the risks associated with achieving them
D : always want lower returns so that the risk is minimized
Correct Answer : A
10 : A major advantage of using the maximization of shareholder wealth as the primary goal of the firm is that this goal considers .
A : the timing and the risk of the expected benefits to be received
B : the investors consumption utility
C : the value of closely held partnerships
D : All of these are correct
Correct Answer : A
11 : The primary reason for the divergence between the shareholder wealth maximization goal and the actual goals pursued by management has been attributed to .
A : separation of social responsibility and stakeholders concerns
B : separation of ownership and control
C : separation of personal welfare and long-run profit goals
D : the granting of golden parachute contracts
Correct Answer : B
12 : Giving top management is one method that ensures managers will act in the interest of shareholders in merger decisions.
A : golden parachute contracts
B : excellent pay 2 / 4
C : executive perks
D : job security
Correct Answer : A
13 : arise from the divergent objectives between owners and managers.
A : Shareholder relationships
B : Stakeholder problems
C : Creditor problems
D : Agency problems
Correct Answer : D
14 : Agency costs include all of the following, EXCEPT .
A : expenditures to monitor managements actions
B : providing stock as part of managements compensation expenditures to structure the organization
C : flotation costs
D : bonding expenditures
Correct Answer : C
15 : A potential agency conflict can arise between stockholders and creditors because owners may .
A : increase the risk of a firms investments
B : decrease the amount of debt outstanding
C : decrease the risk of a firms investments
D : increase the firms net worth
Correct Answer : A
16 : Creditors have a fixed financial claim on a companys resources through all of the following
EXCEPT .
A : long term debt
B : bank loans
C : preferred stock
D : commercial paper
Correct Answer : C
17 : Agency problems may give rise to constraints that the market value of firms.
A : increase
B : decrease
C : do not affect
D : are not important to
Correct Answer : B
18 : All of the following are problems with the microeconomic profit maximization model
EXCEPT .
A : the absence of a time dimension
B : offers financial managers insights to a wide range of problems
C : does not consider the risk of alternative decisions
D : the problem of defining profits 3 / 4
Correct Answer : B
19 : are largely outside of the direct control of managers.
A : Investment strategies
B : Economic environment factors
C : Major policy decisions
D : Dividend policies
Correct Answer : B
20 : The success of a firm is linked to its stakeholders. This group includes .
A : communities in which they operate
B : suppliers
C : employees
D : All of these are correct
Correct Answer : D
21 : Techniques identified by John Casey that managers could keep in mind when addressing the ethical dimensions of a business problem include all of the following EXCEPT .
A : collecting all the facts bearing on the problem
B : clarifying the parameters of the problem
C : involving all parties with a financial interest in the outcome
D : seeking equity for those who may be affected
Correct Answer : C
22 : Many entrepreneurs are diversified with respect to their personal wealth.
A : poorly
B : highly
C : well
D : 90%
Correct Answer : A
23 : deals with economic decisions of individuals, households, and firms.
A : Economic accounting
B : Microeconomics
C : Blue Chip econometrics
D : Macroeconomics
Correct Answer : B
24 : Financial management draws heavily on the following related disciplines:
A : accounting
B : macroeconomics
C : microeconomics
D : All of these disciplines are applicable
Correct Answer : D
25 : The chief financial officer (CFO) normally has responsibility for all of the following EXCEPT .
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