Financial Management | Chapter 1 | Part 4 | MBA MCQs | FM

Finacial Management MCQs

  

 

1. The controller's responsibilities are primarily…………..in nature, while the treasurer's responsibilities are primarily related to………….
   1.   operational; financial management
   2.   financial management; accounting
   3.   accounting; financial management
   4.   financial management; operations
2. In the US, the………………..has been given the power to adopt auditing, quality control, ethics, and disclosure standards for public companies and their auditors as well as investigate and discipline those involved.
   1.   American Institute of Certified Public Accountants (AICPA)
   2.   Financial Accounting Standards Board (FASB)
   3.   Securities and Exchange Commission (SEC)
   4.   public Company Accounting Oversight Board (PCAOB)
3. A company's………….is (are) potentially the most effective instrument of good corporate governance.
   1.   common stock shareholders
   2.   board of directors
   3.   top executive officers
   4.   all of these
4. The Sarbanes-Oxley Act of 2002 (SOX) was largely a response to:
   1.   a series of corporate scandals involving Enron, WorldCom, Global Crossing, Tyco and numerous others.
   2.   charges of excessive compensation to top corporate executives.
   3.   rising complaints by investors and security analysts over the financial accounting for stock options
   4.   a dramatic rise in the US trade deficit.
5. ___________ refers to meeting the needs of the present without compromising the ability of future generations to meet their own needs.
   1.   Corporate Social Responsibility (CSR)
   2.   Sustainability
   3.   Convergence
   4.   Green Economics
6. The field of finance is closely related to the fields of:
   1.   statistics and economics
   2.   economics and accounting
   3.   statistics and risk analysis
   4.   accounting and comparative return analysis
7. The first area of study to benefit from the focus in the 1950's to a more analytical, decision oriented approach was:
   1.   capital budgeting (allocating financial capital to the purchase of plant and equipment)
   2.   cash and inventory management
   3.   capital structure formulation (the balance between liabilities and equity) D. dividend policy ( the relationship between dividends and earnings)
8. The ultimate measure of performance is:
   1.   the amount of the firm's earnings
   2.   return on the firm's total assets
   3.   the firm's profit margin
   4.   how the earnings are valued by the investor
9. Which of the following is not the responsibility of financial management?
   1.   allocation of funds to current and capital assets
   2.   preparation of the firm's accounting statements
   3.   development of an appropriate dividend policy
   4.   obtaining the best mix of financing alternatives
10. Which of the following are not among the daily activities of financial management
    1.   sale of shares and bonds
    2.   the receipt and disbursement of funds
    3.   inventory control
    4.   credit management
11. A main benefit to the corporate form of organization is:
    1.   double taxation of corporate income
    2.   limited liability for the corporate shareholders
    3.   simplicity of decision making and low organizational complexity
    4.   a major management role exists for the firm's owners
12. In analyzing the firm, the investor should consider:
    1.   the risk inherent in the firm's operation
    2.   the quality and reliability of the firm's reported earnings
    3.   all of the above should be considered
    4.   the time patterns over which the firm's earnings increase/decrease
13. Agency theory examines the:
    1.   relationship between the owners and managers of the firm
    2.   insurability of the firm's assets
    3.   relationship between dividend policy and firm value
    4.   value of the firm relative to other firms in the industry
14. Financial markets:
    1.   exist as a vast global network of individuals and financial institutions
    2.   circulate information quickly that affects prices of securities
    3.   include a broad group representing lenders, borrowers, owners, institutional investors, corporations, government units and others
    4.   all of the above
15. Capital is allocated by financial markets by:
    1.   a lottery system between investment dealers
    2.   pricing securities based on their risk and expected future cash flows
    3.   by pricing risky securities higher than low-risk securities
    4.   by a government risk-rating system based on AAA for low risk and CCC for high risk
16. The allocation of capital is determined by:
    1.   expected rates of return.
    2.   the initial sale of securities in the primary market
    3.   the Bank of Canada
    4.   the size of the federal debt
17. The mix of debt and equity in a firm is referred to as the firm's:
    1.   primary capital
    2.   capital structure
    3.   cost of capital
    4.   capital composition
18. The main focus of finance for the last 40 years has been
    1.   mergers and acquisitions
    2.   risk-return relationships
    3.   inflation
    4.   conglomerate firms
19. To financial analysts, "working capital" means the same thing as __________.
    1.   total assets
    2.   current assets minus current liabilities.
    3.   fixed assets
    4.   current assets