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Team Homework upload - Name_Roketa Tanner Lisa Dang Date 1...

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Name: ____ Roketa Tanner & Lisa Dang _______________ Date: 9/22/2010 1. Proper risk-return management means that A) the firm should take as few risks as possible. B) consistent with the objectives of the firm, an appropriate trade-off between risk and return should be determined. C) the firm should earn the highest return possible. D) the firm should value future profits more highly than current profits. 2. Agency theory assumes that corporate managers act to increase the wealth of corporate shareholders. T or F? 3. Which of the following is not a primary source of capital to the firm? A) assets B) common stock C) preferred stock D) bonds 4. The residual income of the firm belongs to A) creditors. B) preferred stockholders. C) common stockholders. D) bondholders. 5. The best indication of the operational efficiency of management is 6. Which account represents the cumulative earnings of the firm since its formation, minus dividends paid? 7. The major limitation of financial statements is 8. The orientation of book value per share is __________, while the orientation of market value per share is ___________. A) short term, long term B) future, historical C) historical, future Page 1
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D) long term, short term 9. A firm with earnings per share of $5 and a price-earnings ratio of 15 will have a stock price of 10. Which of the following is an outflow of cash? 11. Which of the following is an inflow of cash? 12. Depreciation is a source of cash inflow because A) it is a tax-deductible noncash expense. B) it supplies cash for future asset purchases. C) it is a tax-deductible cash expense. D) it is a taxable expense.
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