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Chapter 1 - Question 1
Which of the following is not one of the three major areas of finance?
a. accounting
b. investments and financial markets
c. financial manaement of companies
d. the banking system |
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Chapter 1 - Question 2
Financial assets like stocks and bonds have value because:
a. they represent ownership of companies
b. people are proud to own them
c. they provide tangible benefits as do real assets.
d. they give their owners command over future cash flows |
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d. they give their owners command over future cash flows |
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Chapter 1 - Question 3
Financial assets:
a. are legal documents
b. give their owners claims to past cash flows
c. include stocks and bonds
d. Both a & c
e. All of the above |
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Chapter 1 - Question 4
A company can raise money to purchase assets by:
a. borrowing money
b. issuing stock
c. using money earned
d. Both a & b
e. All of the above |
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Chapter 1 - Question 5
Companies finance the purchase of assets through:
a. debt financing, the sale of bondsb. issuing stock
b. equity financing, the sale of stock
c. lease financing
d. only a. and b. above
e. all of the above |
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Chapter 1 - Question 6
The executive in charge of the finance department is the company's:
a. CEO
b. COO
c. CFO
d. CIO |
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Chapter 1 - Question 7
Raising money and handling financial relationships with outsiders is a function of the:
a. controller
b. treasury department
c. accounting department
d. all of the above |
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Chapter 1 - Question 8
The price that investors are willing to pay for a firm's securities can best be described by which of the following statements?
a. If a company is performing poorly, investors will not buy that company's securities.
b. If a company is performing well, investors will buy the company's stock at almost any price because the price of the stock should increase.
c. Since the value of a company's securities depends largely on future cash flows, investors will consider the company's performance in estimating the future cash flows that will come from owning its securities.
d. Since risk is difficult to assess for any particular company, investors don't usually consider risk when deciding how much to pay for a company's securities. |
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c. Since the value of a company's securities depends largely on future cash flows, investors will consider the company's performance in estimating the future cash flows that will come from owning its securities. |
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