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FIN200 multiple choice questions use it as a guide only2.docx

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Business

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Final Exam Version 1
) What is the primary goal of financial management?
A.
Minimizing risk of the firm
B.
Maximizing shareholder wealth
C.
Increased earnings
D.
Maximizing cash flow
2) Regarding risk levels, financial managers should
A.
evaluate investor's desire for risk
B.
focus primarily on market fluctuations
C.
pursue higher risk projects because they increase value
D.
avoid higher risk projects because they destroy value
3) Maximization of shareholder wealth is a concept in which
A.
optimally increasing the long-term value of the firm is emphasized.
B.
virtually all earnings are paid as dividends to common stockholders.
C.
increased earnings is of primary importance.
D.
profits are maximized on a quarterly basis.
4) An increase in investments in long-term securities will:
A.
decrease cash flow from financing activities.
B.
increase cash flow from financing activities.
C.
increase cash flow from investing activities.
D.
decrease cash flow from investing activities.
5) Which of the following is not a primary source of capital to the firm?

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A.
bonds
B.
preferred stock
C.
assets
D.
common stock
6) The statement of cash flows does NOT include which of the following sections?
A.
cash flows from financing activities
B.
cash flows from investing activities
C.
cash flows from operating activities
D.
cash flows from sales activities
7) For a given level of profitability as measured by profit margin, the firm's return on equity will
A.
decrease as its current ratio increases.
B.
decrease as its times-interest-earned ratio decreases.
C.
increase as its debt-to-assets ratio decreases.
D.
increase as its debt-to assets ratio increases.
8) In examining the liquidity ratios, the primary emphasis is the firm's
A.
overall debt position.
B.
ability to earn an adequate return.
C.
ability to effectively employ its resources.
D.
ability to pay short-term obligations on time.
9) The most rigorous test of a firm's ability to pay its short-term obligations is its
A.
quick ratio.
B.

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