VCM: MODULE 4 QUIZ

Planning for future growth is called:

• capital budgeting

• working capital management

• financial forecasting

• none of the above

In most corporations, the CFO ranks under the CEO.

• True

• False

The Chairman of the Board must also be the CEO.

• True

• False

The board of directors is the highest ranking body in a corporation, and the chairman of the board is the highest ranking individual. The CEO generally works under the board and its chairman, and the board generally has the authority to remove the CEO under certain conditions. The CEO, however, cannot remove the board, but he or she can endeavor to have the board voted out and a new board voted in should a conflict arise. It is possible for a person to simultaneously serve as CEO and chairman of the board, though many corporate control experts believe it is bad to vest both offices in the same person.

• True

• False

Partnerships and proprietorships generally have a tax advantage over corporations.

• True

• False

The more capital a firm is likely to require, the greater the probability that it will be organized as a corporation.

• True

• False

In order to maximize its shareholders' value, a firm's management must attempt to maximize the stock price in the long run, or the stock's "intrinsic value."

• True

• False

In order to maximize its shareholders' value, a firm's management must attempt to maximize the expected EPS.

• True

• False

As a result of financial scandals occurring during the past decade, there has been a strong push to improve business ethics.

• True

• False

Financial management is concerned with allocating, raising and controlling the funds of the firm.

• True

• False