A. A financial manager's goal of maximizing current or short-term earnings may not be appropriate because a. It fails to consider the timing of the
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A. A financial manager's goal of maximizing current or short-term earnings may not be appropriate because 

a. It fails to consider the timing of the benefits 

b. Increased earnings may be accompanied by unacceptably higher level of risks 

c. Earnings are subjective; they can be defined in various ways such as accounting or economic earnings Option 3 

d. All of the above 

 

 

B. Which of the following is not a major area of concern and emphasis in modern financial management? 

a. Marginal analysis 

b. Risk-return trade-off 

c. Commodity trading 

d. Changing financial institutions 

 

 

C. Which of the following is not a major area of concern and emphasis in modern financial management? 

a. Inflation and its effect on profits 

b. Stable short-term interest rates 

c. Changing international environment 

d. Increased reliance on debt 

 

 

D. Proper-risk 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 highest return possible 

d. They should value future profits more highly than current profits 

 

 

E. What is the primary goal of financial management? 

a. Increase earnings 

b. Maximizing cash flows 

c. Maximizing shareholders' wealth 

d. Minimizing risk of the firm  

 

 

F. Which of the following statements are true? 

a. The higher the profit of a firm, the higher the value of the firm is assured of receiving in the market

b. Social responsibility and profit maximization are synonymous

c. Maximizing the earnings of the firm is the primary goal of financial management

d. There are some serious problems with the financial goal of maximizing earnings of the firm


G. Corporate social responsibility is

a. Effectively enforced through the controls envisioned by classical economics

b. The obligation to shareholders to earn a profit

c. The duty to embrace service to the public interest

d. The obligation to serve long-term organizational interests


H. A financial manager discovers a problem that could mislead users of the firm's financial data and has informed his/her immediate superior. He/she should report the circumstance to the audit committee and/or the board of directors only if

a. The immediate superior, who report to the Chief Executive Officer knows about the situation but refuses to correct it

b. The immediate superior assures the financial manager that the problem will be resolved

c. The immediate superior reports the situation to his/her superior

d. The immediate superior, the firm's Chief Executive Officer, knows about the situation but refuses to correct it


I. If a financial manager discovers unethical conduct in his/her organization fails to act, he/she will be in violation of which ethical standards?

a. "Actively or passively subvert the attainment of the organization's legitimate and ethical objectives"

b. "Communicate unfavorable as well as favorable information".

c. "Condone the commission of such acts by others within their organization"

d. All of the answers are correct


J. Regine is a financial manager, who has discovered that the company is violating environmental regulations. If her immediate superior is involved, her appropriate action is to

a. Do nothing since she has a duty of loyalty to the organization

b. Consult the audit committee.

c. Present the matter to the next higher managerial level

d. Confront her immediate superior

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