FINANCIAL MANAGEMENT QUIZ 1

Which of the following best identifies the four main areas of finance?

• Exchange rate management, investments, financial institutions and markets, international finance

• Corporate finance, investments, capital structure, international finance

• Corporate finance, investments, financial institutions and markets, international finance

• Corporate finance, capital budgeting, financial institutions and markets, regulation

The set of financial activities that support the OPERATIONS of a business is best described by which main area of finance?

• Corporate finance

• Investments

• Financial institutions and markets

• International finance

The means by which a company is financed refers to the firm's ________.

• capital budgeting

• capital structure

• accounts receivable management

• working capital management

Managing the firm's short-term financing activities is known as ________.

• capital budgeting

• capital structure

• accounts receivable management

• working capital management

Which of the statements below is TRUE?

• Accounting Identity is: Assets ≡ Liabilities - Owners' Equity.

• Accounting Identity is: Assets ≡ Liabilities + Owners' Equity.

• Accounting Identity is: Assets ≡ Owners' Equity - Liabilities.

• Accounting Identity is: Liabilities ≡ Assets + Owners' Equity.

Your company just sold a product with the following payment plan: $40,000 today, $35,000 next year, and $30,000 the following year. If your firm places the payments into an account earning 6% per year, how much money will be in the account after collecting the last payment?

• $118,767

• $112,044

• $94,074

• $85,000

All financial transactions have a buyer and a seller.

• TRUE

• FALSE

If a company offers stock for sale for the first time and the proceeds go to the company, then this is a sale in the primary market.

• TRUE

• FALSE

The future value of a combination of positive and negative cash flows cannot be determined.

• TRUE

• FALSE

Financial markets can be classified by which of the following?

• Type of asset traded

• Maturity of the financial asset

• Owner of the financial asset

• All of the above can be classifications of financial markets.