Economics Chapter 1 2 The Past The Study Finance Has

Topic: Goal of financial management

72. In the past, the study of finance has included

73. Professor Merton Miller received the Nobel Prize in Economics for his work on

74. Professors Harry Markowitz and William Sharpe received their Nobel Prize in Economics for their

contributions to the

75. Behavioral finance is the study of

76. Which of the following is NOT addressed by the Dodd-Frank Act?

01–13

77. Proper risk-return management means that

78. One of the major disadvantages of a sole proprietorship is

79. One of the major advantages of a sole proprietorship is

80. The partnership form of an organization

81. A corporation is

82. With an S corporation

01–14

83. An S corporation

84. Corporate governance is the

85. Many companies such as Tyco, Enron, and WorldCom that suffered financial distress in the late 1990s

and early 2000s

86. Agency theory examines the relationship between the

87. Agency theory would imply that conflicts are more likely to occur between management and

shareholders when

01–15

88. Agency theory deals with the issue of

89. Agency problems are least likely to arise in which organizational form?

90. Institutional investors are important in today’s business world because

91. The increasing percentage ownership of public corporations by institutional investors has

92. The Sarbanes-Oxley Act was passed in an effort to

93. The Sarbanes-Oxley Act set up the Public Company Accounting Oversight Board with the responsibility

for all of the following except

94. A financial manager’s goal of maximizing current or short-term earnings may not be appropriate

because

95. Maximization of shareholder wealth is a concept in which

97. As mergers, acquisitions, and restructuring have increased in importance, agency theory has become

more important in assessing whether

98. Insider trading occurs when

99. The major difficulty in most insider-trading cases has been

100. Money markets include which of the following securities? (this is a question that should be listed in

chapter 7 rather than chapter 1). Instead see the new question below.

101. What is the major difference between money markets and capital markets?

102. Capital markets do not include which of the following securities?

103. When a corporation uses the financial markets to raise new funds, the sale of securities is made in the

104. Companies that have higher risk than a competitor in the same industry will generally have

105. What is capital as defined in the financial industry?

106. The financial markets allocate capital to corporations by

107. Corporate restructuring can be a result of more institutional ownership. Restructuring can cause

108. A corporate restructuring can result in

109. Which of the following is not an example of restructuring?

110. Future financial managers will need to understand

111. The increase in the internationalization of financial markets has led to

112. The internationalization of the financial markets has

113. The Internet has affected the financial markets by

114. Increased productivity due to technology has

115. Companies that perform well

116. The entity that is responsible for establishing the allocation and cost of capital is/are

117. The benefits of social responsibility often include

118. Who is accountable for social responsibility within a firm?

119. Regarding risk levels, financial managers should

01–22

Chapter 01 Test Bank – Static Summary