Test Bank For Foundations of Financial Management 11th Canadian Edition By Stanley B. Block
Chapter 01
The Goals and Functions of Financial Management
Multiple Choice Questions
- What is the primary goal of financial management?
A.Increased earnings
B. Maximizing cash flow
C. Maximizing shareholder wealth
D. Minimizing risk of the firm
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-03 Examine the primary goal of finance as the maximization of shareholder wealth as measured by share price.
Topic: 01-06 Goals of Financial Management
- 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.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-03 Examine the primary goal of finance as the maximization of shareholder wealth as measured by share price.
Topic: 01-07 Maximizing Shareholder Wealth
- Which of the following is not a major area of concern and emphasis in modern financial management and in this text?
A.Inflation and its effect on profits
B. Stable short-term interest rates
C. Changing international environment
D. Increased reliance on debt
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Medium
Learning Objective: 01-02 Identify the analysis and decision-making nature of finance while considering return and risk.
Topic: 01-05 A Discipline Used by Financial Managers
- Which of the following is not a major area of concern and emphasis in modern financial management and in this text?
A.Marginal analysis
B. Risk-return trade-off
C. Commodity trading
D. Changing financial institutions
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Medium
Learning Objective: 01-02 Identify the analysis and decision-making nature of finance while considering return and risk.
Topic: 01-05 A Discipline Used by Financial Managers
- Some of the effects of high inflation are:
A.the gold standard was eliminated.
B. purchasing power increased.
C. interest rates fall.
D. Phantom profits and undervalued assets.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Medium
Learning Objective: 01-06 Outline the role of financial markets in allocating capital; determining value; and establishing yields.
Topic: 01-17 Allocation of Capital
