Quiz 6 - Quiz 1 1: When evaluating a project in which a...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Quiz 1 1: When evaluating a project in which a firm might invest, both the size and the timing of the cash flows are important. a. True b. False Your Answer: True Feedback: You are correct! CORRECT 2: Milo, Inc. spends approximately $3 million annually to hire auditors to review the firm's financial statements. This is an example of an indirect agency cost. a. True b. False Your Answer: False Feedback: You are correct! CORRECT 3: The board of directors has the power to act on behalf of the shareholders to hire and fire the operating management of a firm. In a legal sense, the directors are "principals" and the shareholders are "agents." a. True b. False Your Answer: False Feedback: You are correct! CORRECT 4: The vice-president of finance generally reports directly to the chairman of the board. a. True b. False Your Answer: False Feedback: You are correct! CORRECT 5: A manager in charge of working capital determines: a. how to raise the money required to fund a project. b. how much inventory a firm should maintain. c. how many additional shares of stock should be sold. d. which projects a firm should undertake. Your Answer: how much inventory a firm should maintain. Feedback: You are correct! CORRECT 6: Which one of the following is the best description of the goal of a financial manager in a corporation where shares are publicly traded? a. maximize sales growth over the short-term
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
b. maximize profits over the short-term c. avoid financial distress d. maintain steady earnings growth Your Answer: maximize the current value per share of the existing stock Feedback: You are correct! CORRECT 7: The duties of a financial manager include determining:I. which marketing strategy to use to promote a product.II. the most appropriate mix of long-term debt and equity.III. which projects a firm should undertake.IV. how much short-term debt to utilize. a. I and II only b. I, II, and III only c. II and III only d. II, III, and IV only Your Answer: II, III, and IV only Feedback: You are correct! CORRECT 8: Ann is interested in purchasing Ted's factory. Since Ann is a poor negotiator, she hires Mary to negotiate a purchase price. Identify the parties to this transaction. a. Mary is the principal and Ann is the agent. b. Ted is the principal and Ann is the agent. c. Ted is the agent and Ann is the principal. d. Ann is the principal and Mary is the agent. Your Answer: Ann is the principal and Mary is the agent. Feedback: You are correct! CORRECT 9: A financial manager is responsible for deciding whether or not new manufacturing equipment should be purchased to replace existing equipment. The firm has sufficient cash available to make the purchase. The new equipment would reduce labor expenses and would allow the firm to reduce its investment in inventory. Which of the financial management areas would be involved in this decision?I. capital budgetingII. capital structureIII. working capital a. I only b. I and II only c. II and III only d. I and III only Your Answer: I and III only
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 10

Quiz 6 - Quiz 1 1: When evaluating a project in which a...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online