第一章
1 CORRECT 
Which of the following are microeconomic variables that help define and explain the discipline of finance? D
  A) risk and return
  B) capital structure
  C) inflation
  D) all of the above
Feedback: All of the above are relevant in explaining finance.
 
2 CORRECT 
One primary macroeconomic variable that helps define and explain the discipline of finance? C
  A) capital structure
  B) inflation
  C) technology
  D) risk
Feedback: Technology is very important in explaining the field of finance.
 
3 CORRECT 
The money markets deal with _________. B
  A) securities with a life of more than one year
  B) short-term securities
  C) securities such as common stock
  D) none of the above
Feedback: The money markets are concerned with short-term securities, those with a life less than one year.
 
4 CORRECT 
The ability of a firm to convert an asset to cash is called ___A_________.
  A) liquidity
  B) solvency
  C) return
  D) marketability
Feedback: Liquidity also means how close an asset is to cash.
 
5 CORRECT 
Early in the history of finance, an important issue was: A
  A) liquidity
  B) technology
  C) capital structure
  D) financing options
Feedback: Maintaining liquidity was a major concern historically.
 
6 INCORRECT 
The __________C_________ is the most common form of business organization in the U.S.
  A) corporation
  B) partnership
  C) sole proprietorship
  D) none of the above
Feedback: There are more sole proprietorships than any other form of business organization.
 
7 CORRECT 
The _________C___________ has more sales in dollars than any other form of business organization.
  A) sole proprietorship
  B) partnership
  C) corporation
  D) none of the above
Feedback: The corporation is the most important in terms of dollars.
 
8 CORRECT 
One major disadvantage of the sole proprietorship is _____B___________.
  A) simplicity of decision-making
  B) unlimited liability
  C) low operational costs
  D) none of the above
Feedback: The owners of a sole proprietorship are personally liable.
 
9 CORRECT 
The appropriate firm goal in a capitalist society is ______B__________.
  A) profit maximization
  B) shareholder wealth maximization
  C) social responsibility
  D) none of the above
Feedback: The goal is to maximize the wealth of shareholders.
 
10 CORRECT 
The agency problem will occur in a business firm if the goals of ______C______ and shareholders do not agree.
  A) investors
  B) the public
  C) management
  D) none of the above
第二章
Feedback: The goals of management may be different from those of shareholders.
deductibleThe accounting statements that a firm is required to file include all but one of these. B
  A) Balance Sheet
  B) Statement of Accounts Receivable
  C) Income Statement
  D) Statement of Cash Flows
Feedback: The required statements include the income statement, balance sheet and statement of changes in cash flows. The statement of changes in owners equity (or retained earnings) is also required by Generally Accepted Accounting Principles but is not covered in this text.
 
2 CORRECT 
The _______A________ shows the firm's operating results over a period of time.
  A) Income Statement
  B) Statement of Cash Flows
  C) Balance Sheet
  D) None of the above
Feedback: The Income Statement represents a moving picture of a firm's revenues and expenses.
 
3 CORRECT 
All of the following except one are tax-deductible expenses. C
  A) interest expense
  B) depreciation
  C) common stock dividends
  D) income taxes
Feedback: Common stock dividends are not tax deductible to a firm.
 
4 CORRECT 
All of the following are non-operating expenses except ______B_______.
  A) interest expense
  B) cost of goods sold
  C) preferred stock dividends
  D) taxes
Feedback: The cost of goods sold is an operating expense.
 
5 CORRECT 
Bondholders receive _____C________ from the business firm.
  A) preferred dividend payments
  B) common stock payments
  C) interest payments
  D) royalties
Feedback: Bondholders are typically paid interest semi-annually.
 
6 CORRECT