Business Finance Lighting Quiz

To achieve the goal of profit maximization for each alternative being considered, the financial manager would select the one that is expected to result in the highest monetary return.

• True

• False

Dividend payments change directly with changes in earnings per share, meaning when the share price goes up, dividends also increase.

• True

• False

The wealth of corporate owners is measured by the share price of the stock.

• True

• False

Financial markets are intermediaries that channel the savings of individuals, businesses, and government into loans or investments.

• True

• False

The money market involves trading of securities with maturities of one year or less while the capital market involves the buying and selling of securities with maturities of more than one year.

• True

• False

High cash flow is generally associated with a higher share price whereas higher risk tends to result in a lower share price.

• True

• False

When making a financial decision, financial managers should accept only those actions that are

expected to increase the firm's profitability.

• True

• False

To achieve the goal of profit maximization, the financial

manager should aim to decrease costs and increase sales.

• True

• False

The most important objective for a financial manager is to maximize shareholder wealth.

• True

• False

Stockholders expect to earn higher rates of return on investments of lower risk and lower rates of

return on investments of higher risk.

• True

• False