TRUE/FALSE In general, the role of the financial manager is to plan for the acquisition and use of funds so as to maximize the value of the firm. ANS: T DIF: Easy TOP: Financial manager The financial manager must execute his or her duties independent of the other activities of the firm in order to properly maximize the value of the firm. ANS: F DIF: Easy TOP: Financial manager Two key limitations of the proprietorship form of business involve potential difficulty in raising needed capital and the presence of unlimited personal liability for business debts. ANS: T DIF: Easy TOP: Proprietorship A hostile takeover involves an attempt by one group of stockholders to solicit votes from other stockholders in order to put a new management team into place and is usually motivated by low stock price. ANS: F DIF: Easy TOP: Hostile takeover No firm can take cost-increasing, socially responsible actions in a competitive marketplace and expect to continue to compete, even if those cost-increasing actions yield significant benefits to the firm. ANS: F DIF: Easy TOP: Social responsibility The proper goal of the financial manager should be to maximize the firm's expected profit, because this will add the most wealth to each of the individual shareholders (owners) of the firm. ANS: F DIF: Easy TOP: Goal of firm One way to state the decision framework most useful for carrying out the firm's objective is that the financial managers should seek that combination of assets, liabilities, and capital which will generate the largest expected projected income over the relevant time horizon. ANS: F DIF: Easy TOP: Objectives of firm The riskiness inherent in a firm's earnings per share (EPS) depends on both the types of projects the firm takes on and the manner in which the projects are financed. ANS: T DIF: Easy TOP: Risk and earnings Cultural differences in do not impact the multinational corporations as they expand into different geographic regions. ANS: F DIF: Easy TOP: Multinational Corporations Normal profits are those that result in rates of return that are just sufficient to attract new capital in financial markets. ANS: T DIF: Easy TOP: Normal profits
TRUE/FALSE In general, the role of the financial manager is to plan for the acquisition and use of funds so as to maximize the value of the firm. ANS: T DIF: Easy TOP: Financial manager The financial manager must execute his or her duties independent of the other activities of the firm in order to properly maximize the value of the firm. ANS: F DIF: Easy TOP: Financial manager Two key limitations of the proprietorship form of business involve potential difficulty in raising needed capital and the presence of unlimited personal liability for business debts. ANS: T DIF: Easy TOP: Proprietorship A hostile takeover involves an attempt by one group of stockholders to solicit votes from other stockholders in order to put a new management team into place and is usually motivated by low stock price. ANS: F DIF: Easy TOP: Hostile takeover No firm can take cost-increasing, socially responsible actions in a competitive marketplace and expect to continue to compete, even if those cost-increasing actions yield significant benefits to the firm. ANS: F DIF: Easy TOP: Social responsibility The proper goal of the financial manager should be to maximize the firm's expected profit, because this will add the most wealth to each of the individual shareholders (owners) of the firm. ANS: F DIF: Easy TOP: Goal of firm One way to state the decision framework most useful for carrying out the firm's objective is that the financial managers should seek that combination of assets, liabilities, and capital which will generate the largest expected projected income over the relevant time horizon. ANS: F DIF: Easy TOP: Objectives of firm The riskiness inherent in a firm's earnings per share (EPS) depends on both the types of projects the firm takes on and the manner in which the projects are financed. ANS: T DIF: Easy TOP: Risk and earnings Cultural differences in do not impact the multinational corporations as they expand into different geographic regions. ANS: F DIF: Easy TOP: Multinational Corporations Normal profits are those that result in rates of return that are just sufficient to attract new capital in financial markets. ANS: T DIF: Easy TOP: Normal profits
Test-Bank-for-CFIN2,-2nd-Edition-Besley.docx