Ch.1 Financial Management

Which of the following best describes the primary goal of financial management?

• Minimizing risk for the firm

• Maximizing short-term profits

• Maximizing the current value of the company’s stock

• Increasing market share

Which of the following is NOT one of the three basic areas of finance?

• Investments

• Financial Markets and Institutions

• Budget Accounting

• International Finance

What is the main role of a Controller in a firm?

• Managing investments

• Handling taxes and financial accounting

• Overseeing capital expenditures

• Managing exchange rates

Which financial decision is concerned with how to finance the firm’s assets?

• Capital budgeting

• Working capital management

• Capital structure

• Tax planning

What is one disadvantage of a sole proprietorship?

• Double taxation

• Limited liability

• Difficult to start

• Unlimited liability

Which of the following is an advantage of a sole proprietorship?

• Limited liability

• Business taxed twice

• Easiest to start

• Easy to raise large amounts of capital

What does capital budgeting deal with?

• Managing day-to-day finances

• Choosing long-term projects or investments

• Structuring debt payments

• Calculating taxes

Which of the following institutions is considered a financial intermediary?

• The U.S. Treasury

• Credit unions

• Federal Reserve

• SEC (Securities and Exchange Commission)

Which area of finance includes analyzing exchange rates and political risk?

• Corporate Finance

• Investments

• Fintech

• International Finance

What does Fintech aim to do in the financial industry?

• Replace banks completely

• Regulate financial markets

• Deliver financial services more efficiently

• Eliminate the need for investment