Managerial Finance Test Preparation
Course Introduction
Managerial Finance focuses on the principles and practices of financial management within organizations, emphasizing decision-making processes that maximize firm value. The course covers topics such as financial statement analysis, planning and forecasting, capital budgeting, risk and return assessment, cost of capital, financing strategies, and working capital management. Students will learn how to apply financial theories and quantitative methods to solve real-world business problems, evaluate investment opportunities, and understand the impact of financial decisions on organizational performance. The course integrates case studies and practical examples to bridge theory and practice, preparing students for leadership roles in finance and management.
Recommended Textbook
Introduction to Finance Markets Investments and Financial Management 14th Edition by Ronald
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18 Chapters
2711 Verified Questions
2711 Flashcards
Source URL: https://quizplus.com/study-set/1590
Page 2
Chapter 1: The Financial Environment
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151 Verified Questions
151 Flashcards
Source URL: https://quizplus.com/quiz/31565
Sample Questions
Q1) Among the six principles of finance,all are included except:
A)Money has a time value.
B)Higher returns are expected for taking on more risk
C)Diversification of investments can reduce risk
D)Financial markets are efficient in pricing securities
E)all of the above are included
Answer: E
Q2) If the interest rate is greater than 0%,then a dollar today is worth
A)more than a dollar tomorrow
B)the same as a dollar tomorrow
C)less than a dollar tomorrow
D)there is not sufficient information to tell
Answer: A
Q3) The possible conflict between managers and owners is sometimes called the
A)principal-subordinate problem
B)principal-agent problem
C)boss-subordinate problem
D)boss-agent problem
E)none of the above
Answer: B
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Chapter 2: Money and the Monetary System
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148 Verified Questions
148 Flashcards
Source URL: https://quizplus.com/quiz/31566
Sample Questions
Q1) The velocity of money measures the rate of circulation of the money supply and can be expressed by the following equation (note: GDP = gross domestic product and MS = money supply):
A)VM = GDP/MS
B)VM = MS/GDP
C)VM = MS x GDP
D)all of the above
E)none of the above
Answer: A
Q2) With a mint ratio of 15 to 1 between gold and silver and a market ratio of 15.5 to 1:
A)gold should go out of circulation
B)silver should go out of circulation
C)paper money will predominate
D)the bimetallic standard will be stable
Answer: A
Q3) Primitive economies have little occasion to exchange goods or services.
A)True
B)False
Answer: True
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Page 4
Chapter 3: Banks and Other Financial Institutions
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150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/31567
Sample Questions
Q1) Investment banks accept deposits and makes loans to individuals and businesses.
A)True
B)False
Answer: False
Q2) The National Banking Act of 1864 provided for:
A)federally chartered banks
B)the establishment of a system of central banks
C)deregulation and monetary control
D)the establishment of deposit insurance
Answer: A
Q3) Major types of financial institutions include all of the following EXCEPT:
A)commercial banks
B)pension funds
C)insurance companies
D)all of the above are major financial institutions
Answer: D
Q4) International banking exists when banks operate in more than one country.
A)True
B)False
Answer: True
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Chapter 4: Federal Reserve System
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150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/31568
Sample Questions
Q1) Today the responsibilities of the Fed may be described as:
A)those relating to monetary policy,to supervision and regulation,and to services provided for depository institutions and the government.
B)those relating to fiscal policy,to supervision and regulation,and to services provided for depository institutions and the government.
C)those relating to monetary policy,to deregulation,and to services provided for depository institutions and the government.
D)those relating to monetary policy,to supervision and regulation,and to services provided for homeowners and the government.
E)none of the above
Q2) The members of the board of directors of each Federal Reserve bank are:
A)appointed by the Board of Governors of the Federal Reserve System
B)elected by the member banks
C)chosen by the Board of Governors and by the member banks
D)appointed by the President of the United States with the advice and consent of the Senate
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Chapter 5: Policy Makers and the Money Supply
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150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/31569
Sample Questions
Q1) During the 2007 - 2009 financial crisis,some of the very largest financial institutions were deemed as being "too big to fail" because their failure would cause cascading negative repercussions throughout the U.S.and many foreign economies.As a result,the Federal Reserve
A)moved to reduce liquidity in the monetary system and increased its target federal funds rate to above .25 percent.
B)worked with the U.S.Treasury to help facilitate the separation of financially weak institutions with institutions that were financially stronger.
C)both a and b are true
D)none of the above are true
Q2) Currency in the form of Federal Reserve notes are primarily backed by gold certificates and eligible paper.
A)True
B)False
Q3) The President of the United States has no influence over the Federal Reserve System nor exerts any pressure on the Fed.
A)True
B)False
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Chapter 6: International Finance and Trade
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149 Verified Questions
149 Flashcards
Source URL: https://quizplus.com/quiz/31570
Sample Questions
Q1) A domestic importer ordering foreign merchandise from a specific supplier would probably obtain from a Bank A:
A)a bankers' acceptance
B)a traveler's letter of credit
C)a commercial letter of credit
D)travelers' checks
Q2) Which of the following statements is false?
A)The Board of Governors of the Federal Reserve System authorizes member banks to accept drafts that arise in the course of certain types of international transactions.
B)Multinational corporations may engage in foreign exchange management for speculative purposes,as well as for defensive purposes.
C)Arbitrage in the foreign exchange market is the simultaneous purchasing of commodities or securities in one market and selling them in another where the price is higher.
D)All the above statements are correct.
Q3) The Export-Import Bank is a corporation owned by the Federal Reserve Banks.
A)True
B)False
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8
Chapter 7: Savings and Investment Process
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150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/31571
Sample Questions
Q1) Personal consumption expenditures (PCE)does not include:
A)individual expenditures for durable goods
B)individual expenditures for nondurable goods
C)individual expenditures for services
D)all the above are included
Q2) If an individual supplies funds to a business firm by purchasing bonds issued by the firm,the transaction:
A)creates two types of financial assets and two types of financial liabilities
B)increases the liquidity and safety of principal for the individual
C)initially occurs in the primary market
D)limits the ability of the security to be sold in the secondary market
Q3) The federal debt of the United States is owned to a large extent by foreign institutions and individuals.
A)True
B)False
Q4) Direct financing involves the use of securities that represent specific contracts between savers and borrowers.
A)True
B)False
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Chapter 8: Interest Rates
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160 Verified Questions
160 Flashcards
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Sample Questions
Q1) Three theories commonly used to explain the term structure of interest rates are the expectations theory,the liquidity preference theory,and the market segmentation theory.
A)True
B)False
Q2) Speculative inflation is the tendency of prices,aided by union-corporation contracts,to rise during economic expansion and to resist declines during recessions.
A)True
B)False
Q3) Which of the following is not considered to be a basic theory used to explain the term structure of interest rates?
A)expectations theory
B)loanable funds theory
C)liquidity premium theory
D)market segmentation theory
E)two of the above are not considered to be a basic theory
Q4) Tax deferral on investments may increase the volume of savings.
A)True
B)False
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Page 10
Chapter 9: Time Value of Money
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150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/31573
Sample Questions
Q1) For positive interest rates,the future value interest factor is
A)always greater than 1.0.
B)sometimes negative.
C)always less than 0.
D)never greater than 25.
Q2) A loan amortization schedule shows the breakdown of each payment between interest and principal,as well as the remaining balance after each payment.
A)True
B)False
Q3) The present value of an annuity of $5,000 to be received at the end of each of the next six months for 6 years at a 4% annual rate would be:
A)$26,210
B)$52,875
C)$3,950
D)none of the above
Q4) The annual percentage rate (APR)overstates the true or effective interest cost.
A)True
B)False
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11
Chapter 10: Bonds and Stocks: Characteristics and Valuation
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151 Verified Questions
151 Flashcards
Source URL: https://quizplus.com/quiz/31574
Sample Questions
Q1) Inflation-protected Treasury notes have a principal value that changes in accordance with the consumer price index (CPI).
A)True
B)False
Q2) Which of the following are not bond rating agencies?
A)Standard and Poor's
B)Fitch's
C)Duff and Phelps
D)all the above are rating agencies
E)none of the above are rating agencies
Q3) __________________ assess both the collateral and underlying bonds as well as the ability of the issuer to make timely interest and principal payments.
A)Bond covenants
B)Bond indentures
C)Bond ratings
D)none of the above
Q4) Global bonds are generally denominated in euros and are marketed globally.
A)True
B)False
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Chapter 11: Securities Markets
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150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/31575
Sample Questions
Q1) Which of the following is not a reason to sell securities in a private placement?
A)to keep current shareholders from suspecting "sweetheart deals"
B)to forestall a hostile takeover
C)to fulfill a need for an emergency infusion of equity
D)to reduce dividend payouts to shareholders
E)none of the above
Q2) Market stabilization is:
A)disallowed under the Securities Act of 1934
B)permitted for underwriters if the market price falls below the offering price
C)prohibited by the Securities Exchange Commission
D)all the above
E)none of the above
Q3) Exchange-traded options are liquid because they are standardized in terms of:
A)announcement dates
B)future prices
C)timing of the underlying asset
D)location of the underlying asset
E)none of the above.
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13
Chapter 12: Financial Return and Risk Concepts
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150 Verified Questions
150 Flashcards
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Sample Questions
Q1) The expected rate of return on a portfolio is the weighted average of the expected returns of the individual assets in the portfolio.
A)True
B)False
Q2) Diversification occurs when we invest in several different assets rather than just a single one.
A)True
B)False
Q3) The Security Market Line describes the relationship between the:
A)expected return on securities and their systematic risk
B)expected return on securities and their unsystematic risk
C)expected return on a security and the expected return on the market portfolio
D)risk-free rate and the expected return on the market portfolio
Q4) If a market is semi-strong form efficient,it also is by definition weak-form efficient.
A)True
B)False
Q5) A portfolio is any combination of financial assets or investments.
A)True
B)False
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Chapter 13: Business Organization and Financial Data
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150 Flashcards
Source URL: https://quizplus.com/quiz/31577
Sample Questions
Q1) The goal of a business should be:
A)maximization of the owners' wealth
B)maximization of accounting profit
C)maximization of sales
D)maximization of assets
Q2) The liability of all owners in both a limited liability company and a limited partnership is limited to the owners' investment in the company.
A)True
B)False
Q3) The Sarbanes-Oxley Act of 2002 was passed by the U.S.Congress in response several accounting scandals.
A)True
B)False
Q4) Most of accounting practice is based upon the cash concept.
A)True
B)False
Q5) A firm's net income over some period is the same as its cash flow.
A)True
B)False
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Chapter 14: Financial Analysis and Long-Term Financial Planning
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150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/31578
Sample Questions
Q1) Asset management ratios indicate the ability to meet short-term obligations to creditors as they come due.
A)True
B)False
Q2) Budgets are written financial plans utilized in sales forecasts.
A)True
B)False
Q3) The operating profit margin is calculated as the firm's net income divided by net sales.
A)True
B)False
Q4) The method of calculating return on assets which highlights the importance of sales,profit margin,and asset turnover is known as:
A)the Gordon model
B)cost-volume profit analysis
C)DuPont analysis
D)break-even analysis
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Chapter 15: Managing Working Capital
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152 Verified Questions
152 Flashcards
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Sample Questions
Q1) Cash disbursements may include all of the following EXCEPT
A)tax payments
B)rent payments
C)depreciation expense
D)fixed asset outlays
Q2) BP has a cash conversion cycle of 80 days,an average collection period of 25 days,and an average age of inventory of 70 days.Based on this information,BPs operating cycle is ________ days.
A)95
B)85
C)75
D)65
E)none of the above
Q3) The estimated cash inflows are affected by the sales forecast and customer payment patterns.
A)True
B)False
Q4) The transactions motive is the demand for holding cash.
A)True
B)False
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Chapter 16: Short-Term Business Financing
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151 Verified Questions
151 Flashcards
Source URL: https://quizplus.com/quiz/31580
Sample Questions
Q1) In general,short-term self-liquidating bank loans are intended to:
A)help recapitalize a company.
B)help a company finance merger & acquisitions.
C)help a company finance annual shareholder meetings.
D)help a company finance investment in capital assets.
E)none of the above
Q2) A business that needs short-term credit in excess of its regular line of bank credit may:
A)sell common stock to the bank with a repurchase agreement
B)subordinate the interests of the owners to the bank's additional loans
C)make limited use of overdrafts
D)pledge accounts receivable as specific collateral for an additional loan
Q3) Commercial paper dealers:
A)lend to small and large businesses on the basis of their receivables outstanding
B)restrict their paper dealings to negotiable certificates of commercial banks
C)distribute to investors the promissory notes of successful businesses
D)distribute to investors the promissory notes of small but rapidly developing businesses
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Chapter 17: Capital Budgeting Analysis
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150 Verified Questions
150 Flashcards
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Sample Questions
Q1) Cannibalization occurs when a project robs cash flow from the firm's existing line of business.
A)True
B)False
Q2) In the case of mutually exclusive projects:
A)the financial manager is responsible for choosing the average of these alternatives since only one can be chosen;selecting one project requires the selection of the other.
B)they are to be evaluated based on their expected effect on shareholder wealth;all such projects that enhance shareholder wealth should be included in the firm's capital budget.
C)the financial manager is responsible for choosing the top three of these alternatives since only three can be chosen.
D)they are to be evaluated based on their past effect on shareholder wealth;all such projects that enhance shareholder wealth should be included in the firm's capital budget.
E)none of the above statements are correct
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19
Chapter 18: Capital Structure and the Cost of Capital
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149 Verified Questions
149 Flashcards
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Sample Questions
Q1) All of the following statements are correct except:
A)Relevant cash flows are incremental before-tax cash flows,which must be discounted using an incremental after-tax cost of capital.
B)The firm's relevant cost of capital is computed from before-tax financing costs.
C)A project's incremental cash flows must be discounted at a cost of capital that represents the historical cost to the firm of financing the project.
D)In estimating the cost of capital,the firm's analysts need to evaluate investors' historical returns under past market conditions and then use these past returns to compute the firm's cost of raising funds.
E)None of the above statements are correct.
Q2) Other factors being constant,higher fixed operating costs mean:
A)higher financial leverage
B)higher operating leverage
C)lower combined leverage
D)the degree of financial leverage is equal to 1.0
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