AE 122 Prelim Formative Assessment 1

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2/4/22, 1:56 PM 1217 AE 122 Prelim Formative Assessment 1

1217 AE 122 Prelim Formative Assessment 1


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Multiple Choice

Choose the best answer. Two pints each.

It is an axiom that may be characterized by managers making decisions that


conflict with the best interest of the shareholders. *

the agency problems

the risk-return trade-off

stockholders versus managers

the curse of competitive markets

What analysis ensures that the income for the firm will cover its variable costs? *

cost volume profit analysis

ratio analysis

financial analysis

sales analysis

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2/4/22, 1:56 PM 1217 AE 122 Prelim Formative Assessment 1

Future financial managers will need to understand *

international currency cash flows

All of the above

computerized funds transfer

international cash flows

The focal point of financial management in a firm is *

the minimization of the amount of taxes paid by the firm.

the creation of value for shareholders.

the dollars profits earned by the firm.

the number and type of products or services provided by the firm.

The decision function of financial management can be broken down into the
following decisions. *

investment, financing, and asset management

financing and investment

capital budgeting, cash management, and credit management

financing and dividend

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2/4/22, 1:56 PM 1217 AE 122 Prelim Formative Assessment 1

_______ and _______ is an example of a principal and an agent respectively. *

manager; owner

shareholder; manager

shareholder; bondholder

accountant; bondholder

The most important of the three distinct types of decisions when it comes to
value creation. *

liquidity decision

dividend decision

investment decision

financing decision

The long run objective of financial management is to *

maximize earnings per share.

maximize the value of the firm's common stock.

maximize return on investment.

maximize market share.

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2/4/22, 1:56 PM 1217 AE 122 Prelim Formative Assessment 1

Financial management mainly focuses on *

arrangement of funds

all elements of acquiring and using means of financial resources for financial
activities

efficient management of every business

brand dimension

Under this process, the financial manager is concerned with the accounts on the
right-hand side of the balance sheet. *

investment decisions

dividend decisions

financing decisions

liquidity decisions

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