FINANCIAL MANAGEMENT QUIZ

The view that sees capital maximization as the main objective is known as

• Shareholder theory
• Principal-agent problem
• Stakeholder theory
• Corporation theory

Where an organization takes into account the effect of its strategic decisions have on society, this is known as

• corporate governance
• Business policy
• Business ethics
• social responsibility

Which intervention resulted from the Enron scandal?

• The Hampel Committee
• The Sarbannes-Oxley Act
• The Greenbury Committee
• The Cadbury Committee

What makes a corporation distinct from a partnership?

• If the members of a corporation die, the corporation remains in existence providing it has capital
• If the members of a corporation die, the corporation ceases to exist
• A corporation cannot own property
• A corporation cannot be held responsible for the illegal acts of its employees

The range of primary business goals includes:

• maximal wealth for owners
• maximal profits
• high revenue growth
• all of the above

Maximization of owners’ wealth

• uses a short-term view.
• fails to consider the time value of money
• considers risk
• relies on accounting numbers

The chief financial goal of the firm is

• large market share
• wealth maximization
• maximize profits
• high revenue growth

Financial managers undertake the following roles

• accounting and reporting functions
• raising funds
• audit management
• all of the above

Corporate social responsibility means that the firm has responsibilities about objectives and people apart from the owners. Included as other stakeholders are

• regulators
• customers
• general public
• all of the above

Change in the external environment has been mainly due to

• deregulation of the financial markets
• advancing technology
• globalisation
• both (a) and (c)