Finance: Stock Market and Learning Objective

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Chapter 001 The Goals and Functions of Financial Management

True / False Questions
1. As finance emerged as a new field, much emphasis was placed on mergers and acquisitions.
TRUE

Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 1

2. Inflation is assumed to be a temporary problem that does not affect financial decisions. FALSE

Bloom's: Understanding
Difficulty: Easy
Learning Objective: 1

3. Financial Capital is composed of long-term plant and equipment, as well as other tangible investments.
FALSE

Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 1

4. Real Capital is composed of long-term plant and equipment. TRUE

Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 1

1-1

Chapter 001 The Goals and Functions of Financial Management

5. During the 1930s, financial practice revolved around such topics as the preservation of capital, maintenance of liquidity, reorganization of financially troubled corporations and bankruptcy.
TRUE

Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 1

6. In the mid 1950s, finance began to change to a more analytical, decision-oriented approach.
TRUE

Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 1

7. Recently, the emphasis of financial management has been on the relationship between risk and return.
TRUE

Bloom's: Understanding
Difficulty: Medium
Learning Objective: 1
Learning Objective: 3

8. The first Nobel Prizes given to finance professors were for their contributions to capital structure theory and portfolio theories of risk and return.
TRUE

Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 1

1-2

Chapter 001 The Goals and Functions of Financial Management

9. The Internet impacts e-commerce by creating a mechanism for improved communications between a business, its customers, and its suppliers.
TRUE

Bloom's: Understanding
Difficulty: Easy
Learning Objective: 1

10. The Internet has accounted for an acceleration of productivity for "old economy" firms. TRUE

Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 1

11. The Internet is responsible for many new business models. TRUE

Bloom's: Understanding
Difficulty: Easy
Learning Objective: 1

12. Businesses will increasingly rely on B2B Internet applications to speed up the cash flows through their firms.
TRUE

Bloom's: Understanding
Difficulty: Easy
Learning Objective: 1

13. The sole proprietorship represents single-person ownership and offers the advantages of simplicity of decision making and low organizational and operating costs. TRUE

Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 2

1-3

Chapter 001 The Goals and Functions of Financial Management

14. Profits of sole proprietorships are taxed at corporate tax rates. FALSE

Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 2

15. There is unlimited liability in a general partnership.
TRUE

Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 2

16. The most common partnership arrangement carries limited liability to the partners. FALSE

Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 2

17. A limited partnership limits the profits partners may receive. FALSE

Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 1

18. In terms of revenues and profits, the corporation is by far the most important form of business organization in the United States.
TRUE

Bloom's: Understanding
Difficulty: Easy
Learning Objective: 2

1-4

Chapter 001 The Goals and Functions of Financial Management

19. Dividends paid to corporate stockholders have already been taxed once as corporate income.
TRUE

Bloom's: Understanding
Difficulty: Easy
Learning Objective: 2

20. One advantage of the corporate form of organization is that income received by stockholders is not taxable since the corporation already paid taxes on the income distributed. FALSE

Bloom's: Understanding...
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