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WorksheetsFinancial Management 1
Total questions: 10
Worksheet time: 3mins
Generally, a corporation is owned by its:
Managers
Directors
Shareholders
All of these options
A firm's investment decision is also called the:
Financing decision
Capital budgeting decision
Liquidity decision
None of these options
Financing decisions are more important than investment decisions:
True
False
When shareholders appoint financial managers to run firms and make investment decisions, this is called:
Agency cost
Financing decision
Limited liability
Separation of ownership and control
Which of the following is not an advantage of separation of ownership and management of corporations?
Corporations can exist forever
Professional managers can be hired
Agency costs are incurred
Transfer of ownership can be facilitated without affecting the operations of the firm.
The financial goal of a corporation is to maximize:
sales
profits
market value of the firm
managers' benefits
Agency costs are costs incurred when:
Managers do not attempt to maximize firm value
Shareholders incur costs to monitor the managers and influence their actions
Both of these options
None of these options
The minimum acceptable rate of return on an investment is called the:
Opportunity cost of capital
Capital structure decision
Risk
Interest payment
Which of the following is typically considered an agency cost?
Consultant fees
Cost of goods sold
Audit
Taxes
Assets such as equipment and raw materials are referred to as:
Dividends
Securities
Financial assets
Real assets
