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1. In the financial crisis that started in 2006, a significant indicator of the U.S. economic
decline was:
2. The financial crisis that started in 2006 was magnified by which of the following?
3. Not all cash a company generates will be returned to the investors. Which of the following
will NOT reduce the amount of capital returned to the investors?
4. This subarea of finance involves methods and techniques to make appropriate decisions
about what kinds of securities to own, which firms' securities to buy, and how to be paid back in
the form that the investor wishes.
5. This subarea of finance looks at firm decisions in acquiring and utilizing cash received
from investors or from retained earnings.
6. Financial management involves decisions about which of the following?
7. This subarea of finance helps facilitate the capital flows between investors and
companies.
8. This subarea of finance is important for adapting to the global economy.
9. A potential future negative impact to value and/or cash flows is often discussed in terms
of probability of loss and the expected magnitude of the loss. This is called:
10. This is a general term for securities like stocks, bonds, and other assets that represent
ownership in a cash flow.
11. Which of the following is defined as a group of securities that exhibit similar
characteristics, behave similarly in the marketplace, and are subject to the same laws and
regulations?
12. The most commonly accepted groups of asset classes include all of the following except:
13. Which of the following is the firm's highest-level financial manager?
14. Which of the following managers would NOT use finance?
15. Which of the following personal decisions is NOT impacted by finance?
16. When determining a form of business organization, all of the following are considered
EXCEPT:
17. This type of business organization is relatively easy to start, and it is subject to much
lighter regulatory and paperwork burden than other business forms.
18. This type of business organization is entirely legally independent from its owners.
19. Which of the following is NOT considered a hybrid organization?
20. The practice generally known as double taxation is due to:
21. As individual legal entities, corporations assume liability for their own debts, so the
shareholders hold:
22. In order for an angel investor or venture capitalist to exchange capital for ownership in a
business that is a sole proprietorship, which of these must happen?
23. For corporations, maximizing the value of owner's equity can also be stated as:
24. A metaphor used to illustrate how an individual pursuing his own interests also tends to
promote the good of the community.
25. This should be the primary objective of a firm as it may actually be the most beneficial for
society in the long run.
26. Nonwage compensation that might actually enhance owner value, in that such items may
boost managers' productivity.
27. Which of these are NOT basic approaches to minimizing the agency problem?
28. Which of the following is an example of aligning managers' personal interests with those
of the owners?
29. This is the set of laws, policies, incentives, and monitors designed to handle the issues
arising from the separation of ownership and control.
30. This group is elected by stockholders to oversee management in a corporation.
31. These individuals examine the firm's accounting systems and comment on whether
financial statements fairly represent the firm's financial position.
32. These individuals follow a firm, conduct their own evaluations of the company's business
activities, and report to the investment community.
33. These individuals help firms access capital markets and advise managers about how to
interact with those capital markets.
34. These individuals examine a firm's financial strength for its debt holders.
35. Which of the following is legal duty between two parties where one party must act in the
interest of the other party?
36. Which of the following can create ethical dilemmas between corporate managers and
stockholders?
