Economics and Maximization

Topics: Economics, Finance, English-language films Pages: 2 (286 words) Published: December 16, 2013
Below is a free essay on "Fin/370 Final Exam One Of Them" from Anti Essays, your source for free research papers, essays, and term paper examples.

1. The goal of the firm should be the maximization of profit. (True/False) TRUE It should be FALSE. The goal of the firm should be maximization of shareholder wealth.

2. For the risk-averse financial manager, the more risky a given course of action, the higher the expected return must be. (True/False) TRUE

3. The corporation is the best form of organization in terms of raising capital? True/False TRUE

4. The owners of a corporation enjoy unlimited liability.(True/False) FALSE

5. Financial management is concerned with the maintenance and creation of wealth.(True/False) TRUE

6. Shareholder wealth is measured by the market value of the firm’s common stock. (True/False) TRUE

7. Which of the following statements best represents what finance is about? C a. How political, social, and economic forces affect corporations b. Maximizing profits
c. Creation and maintenance of economic wealth
d. Reducing risk

8. The goal of the firm should be: A a. Maximization of profits.
b. Maximization of shareholder wealth.
c. Maximization of consumer satisfaction.
d. Maximization of sales.

9. Consider the timing of the profits of the following certain investment projects: B Profit
L S
Year 1 $ 0 $ 3000
Year 2 $ 3000 $ 0
a. Project S is preferred to Project L.
b. Project L is preferred to Project S.
c. Projects S and L are equally desirable.
d. A goal of profit maximization would favor Project S only.

10. Which of the following best describes the goal of the firm? B a. The maximization of the...
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