BUSINESS FINANCE SHORT QUIZ BY SIR JECHO

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.

• 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 the 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

The ______ is created by a financial relationship between suppliers and users of short-term funds.

• financial market

• money market

• stock market

• capital market

Firms that require funds from external sources can obtain them from _____.

• financial markets

• private placement

• financial institutions

• All of the above

The major securities traded in the capital markets are ____.

• stocks and bonds.

• bonds and commercial paper

• commercial paper and Treasury bills

• Treasury bills and certificates of deposit

The primary goal of the financial manager is _____.

• minimizing risk

• maximizing profit

• maximizing wealth

• minimizing return

A financial manager must choose between four alternative Assets: 1, 2, 3, and 4. Each asset costs $35,000 and is expected to provide earnings over a three-year period as described below.

Based on the profit maximization goal, the financial manager would choose _____.

• Asset 1

• Asset 2

• Asset 3

• Asset 4