1) What is the primary goal of financial management?
A. Maximizing shareholder wealth
B. Minimizing risk of the firm
C. Increased earnings
D. Maximizing cash flow
2) Regarding risk levels, financial managers should
A. focus primarily on market fluctuations
B. evaluate investor's desire for risk
C. pursue higher risk projects because they increase value
D. avoid higher risk projects because they destroy value
3) Maximization of shareholder wealth is a concept in which
A. virtually all earnings are paid as dividends to common stockholders.
B. optimally increasing the long-term value of the firm is emphasized.
C. increased earnings is of primary importance.
D. profits are maximized on a quarterly basis.
4) Which of the following would represent a use of funds and, indirectly, a reduction in cash balances?
A. an increase in accounts payable
B. the sale of new bonds by the firm
C. an increase in inventories
D. a decrease in marketable
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