#1
Which of the following is a primary goal of financial management?
Maximizing sales revenue
Minimizing costs
Maximizing shareholder wealth
Maximizing employee satisfaction
#2
Which financial statement shows a company's revenues and expenses over a period of time?
Balance sheet
Income statement
Cash flow statement
Statement of retained earnings
#3
What is the main objective of capital structure management?
Minimize the firm's tax liability
Maximize shareholder wealth
Minimize the firm's cost of capital
Maximize employee satisfaction
#4
What does the term 'working capital' refer to?
The difference between current assets and current liabilities
The total assets of a company
The capital invested by shareholders
The capital raised from debt financing
#5
What does the term 'cost of capital' refer to?
The cost of borrowing money
The cost of equity
The cost of debt and equity financing
The cost of assets
#6
Which of the following is NOT a component of working capital management?
Cash management
Inventory management
Debt management
Accounts receivable management
#7
What is the purpose of financial leverage?
To increase the risk of the firm
To decrease the return to shareholders
To increase the potential return to shareholders
To decrease the cost of debt
#8
Which of the following is a measure of a company's liquidity?
Debt to equity ratio
Current ratio
Return on equity
Price-earnings ratio
#9
What is the role of the financial markets in corporate finance?
To provide financing to corporations
To set accounting standards
To regulate corporate governance
To enforce tax policies
#10
Which of the following is NOT a method of capital budgeting?
Net present value (NPV)
Internal rate of return (IRR)
Return on investment (ROI)
Cost of goods sold (COGS)
#11
What is the formula for calculating the weighted average cost of capital (WACC)?
WACC = (E/V) * Re + (D/V) * Rd * (1 - Tc)
WACC = (E/V) * Re + (D/V) * Rd
WACC = (E/V) * Re * (1 - Tc) + (D/V) * Rd
WACC = (E/V) * Re * Tc + (D/V) * Rd * (1 - Tc)
#12
What is the Modigliani-Miller theorem about?
Optimal capital structure
Capital asset pricing model
Dividend policy irrelevance
Market efficiency
#13
What is the formula for calculating the return on equity (ROE)?
(Net Income - Dividends) / Total Equity
Net Income / Total Assets
Net Income / Total Equity
(Net Income - Dividends) / Total Assets
#14
Which of the following is NOT a characteristic of a callable bond?
The issuer has the right to redeem the bond before maturity
It typically offers a higher yield than a non-callable bond
The issuer can repurchase the bond at a predetermined price
Callable bonds are less risky for investors