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

Finacial Management MCQs

  

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