FM-Quiz

__________ is concerned with the acquisition, financing, and management of assets with some overall goal in mind

• Financial management

•   Profit maximization

•   Agency theory

Jensen and Meckling showed that __________ can assure themselves that the __________ will make optimal decisions only if appropriate incentives are given and only if the __________ are monitored.

 

• Principals; Agents; Agents

• Agents; Principals; Principals

• Agents; Principals; Agents

Which of the following statements is correct regarding profit maximization as the primary goal of the firm?

• Profit maximization considers the firm's risk level

• Profit maximization will not lead to increasing short-term profits at the expense of lowering expected future profits

• Profit maximization is concerned more with maximizing net income than the stock price.

__________ is concerned with the branch of economics relating the behavior of principals and their agents.  

• Financial management

• Profit maximization

• Agency theory

The __________ decision involves determining the appropriate make-up of the right-hand side of the balance sheet.

• Financing

• Investment

• Capital Budgeting

The __________ decision involves a determination of the total amount of assets needed, the composition of the assets, and whether any assets need to be reduced, eliminated, or replaced.

• Asset Management

• Financing

• Investment

The __________ decision involves efficiently managing the assets on the balance sheet on a day-to-day basis, especially current assets.

• Financing

• Working capital

• Investment

The treasurer’s offi ce is responsible for managing the fi rm’s

• Cash & Credit

• cost accounting

• financial accounting

Financial controller handles

• cash & credit

• Financial accounting

• Cost Accounting

the purchase of a luxurious and

unneeded corporate jet would fall under this heading of

• Direct Cost

• Indirect Cost

• Capital Expenditure