#1
What is the primary goal of financial management in a corporation?
Maximizing shareholder wealth
Maximizing employee satisfaction
Maximizing revenue
Maximizing market share
#2
Which of the following is NOT a component of the time value of money?
Opportunity cost
Present value
Future value
Risk premium
#3
Which of the following represents a measure of a company's profitability?
#4
What does the P/E ratio (Price-to-Earnings ratio) indicate about a company?
The company's ability to pay off its debt
The company's liquidity position
The company's market valuation relative to its earnings
The company's dividend yield
#5
Which financial statement reports a company's revenues and expenses over a specific period?
Balance sheet
Income statement
Statement of cash flows
Statement of retained earnings
#6
Which of the following is a measure of a company's liquidity?
Debt-to-Equity ratio
Current ratio
Return on Investment (ROI)
Earnings per Share (EPS)
#7
What is the formula to calculate the present value of a future cash flow?
PV = FV / (1 + r)^n
PV = FV * (1 + r)^n
PV = FV * (1 - r)^n
PV = FV / (1 - r)^n
#8
Which of the following is a measure of a stock's volatility relative to the market?
Beta
Alpha
Standard deviation
Sharpe ratio
#9
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 - (D/V) * Rd * (1 - Tc)
WACC = (E/V) * Re - (D/V) * Rd
#10
What is the formula for calculating the dividend growth model (DGM) or Gordon Growth Model (GGM)?
P0 = D0 / (r - g)
P0 = D0 * (1 + g) / r
P0 = (D0 + g) / r
P0 = D0 * (1 - g) / r
#11
What does the term 'capital budgeting' refer to in corporate finance?
The process of managing a company's long-term investments
The process of managing a company's short-term investments
The process of managing a company's working capital
The process of managing a company's debt financing
#12
What is the purpose of financial leverage?
To increase a company's liquidity
To increase a company's profitability
To increase a company's financial risk
To decrease a company's financial risk
#13
What does the Capital Asset Pricing Model (CAPM) measure?
The cost of equity
The cost of debt
The weighted average cost of capital (WACC)
The cost of retained earnings
#14
What is the formula for calculating the Cost of Equity (Re) using the Capital Asset Pricing Model (CAPM)?
Re = Rf + (Beta * (Rm - Rf))
Re = Rf * (1 + Beta * (Rm - Rf))
Re = Rf / (1 - Beta * (Rm - Rf))
Re = Rf / (1 + Beta * (Rm - Rf))
#15
What is the purpose of the Modigliani-Miller theorem in corporate finance?
To calculate the weighted average cost of capital
To determine the optimal capital structure of a company
To value a company's stock using dividend discount models
To calculate the internal rate of return
#16
What is the formula for calculating the Weighted Average Beta of a portfolio?
WB = (w1 * β1) + (w2 * β2) + ... + (wn * βn)
WB = (β1 + β2 + ... + βn) / n
WB = (w1 + w2 + ... + wn) / n
WB = (w1 / β1) + (w2 / β2) + ... + (wn / βn)