1.

The liability of sole proprietors is limited to the amount of their investment in the
company
FALSE
2. In a large corporation, preparation of the firm’s financial statements would most likely
be conducted by the 
CONTROLLER
3. A healthy current ratio and an unhealthy quick ratio may be caused by excess
inventory. 
TRUE
4. "Reinvestment" means 
the reinvestment of earnings into new projects.
5. In a firm having both a treasurer and a controller, which of the following would most
likely be handled by the controller 
Internal auditing
6. Financing for public corporations flows through
the financial markets, financial intermediaries, or both.

7. Corporate debt instruments are most commonly traded

over the counter

8. Which of the following statements best distinguishes the difference between real and
financial assets
Financial assets represent claims to income that is generated by real assets.

9. if a project's value is less than its required investment, then the project is financially
attractive.
FALSE

10. Corporate financing comes ultimately from

savings by households and foreign investors

11. The reinvestment of cash back into the firm's operations is an example of a flow of
savings to investment 
TRUE

12.Businesses that aggressively exploit any means possible to increase current

earnings may cross over into fraudulent account practices. *
True

13. Sole proprietorships face the same agency problems as those associated with
corporations
FALSE
14. Which one of these is a money market security?
Commercial paper

15.An individual can save and invest in a corporation by lending money to it or by

purchasing additional shares *
TRUE

16. The opportunity cost of capital is the expected rate of return that shareholders can
obtain in the financial markets on investments with the same risk as the firm's capital
investments
TRUE

17. Excess cash held by a firm should be:

reinvested by the firm in projects offering rates of return higher than the cost of capital.

18.The income statement resembles a snapshot of the firm at a specific time *

FALSE

19.A company can pay for its expansion in all the following ways except *
by purchasing bonds in the secondary market

20. Which of the firm's financial managers is most likely to be involved with
obtaining financing for the firm *
Treasurer

21. The market for derivatives is also a source of financing for corporations
TRUE

22. Boards of directors are generally appointed by the firm's senior officers
FALSE

23. Which of these duties are responsibilities of the corporate treasurer 

Cash management and banking relationships
24. You can buy silver in the: 
Commodity market

25. Increasing leverage will always act to increase a firm's ROE.

FALSE

26. Other things equal, an increase in average accounts receivable will increase a firm's
return on assets.
False

27. If net income is positive, then cash flow from operations must be positive for
that period. *
FALSE

28. Which one of the following can best be characterized as an agency problem
differing incentives between managers and owners

29. An individual can save and invest in a corporation by lending money to it or by

purchasing additional shares *
TRUE
30. Corporations that issue financial securities such as stock or debt obligations to the
public do so primarily to:
increase their access to funds

31. A corporate board of directors should provide support for the top management team 
only when the board approves of management's actions.

32. Ethical decision making in business:

requires adherence to implied rules as well as written rules.

33. The net working capital of a firm will decrease when unpaid bills from suppliers are
later paid with cash. 
FALSE

34.The primary goal of any company should be to maximize current period profits *
FALSE
35.Excess cash held by a firm should be: *
reinvested by the firm in projects offering rates of return higher than the cost of capital.

36. Making good investment and financing decisions is the chief task of the financial
manager.
True

37. Only the IPOs for large corporations are sold in primary markets 
FALSE

38. The higher the times interest earned ratio, the higher the interest expense.
False

39. Ethical decision making by management has a payoff for shareholders in terms of:
enhanced firm reputation value

40. Like public companies, private companies can also use their stock price as a measure
of performance. 
FALSE

41.A well-designed compensation package can help a firm achieve its goal of
maximizing market value. *
TRUE

42. A company may deduct the interest paid to debtholders and the dividends paid to
shareholders when calculating its taxable income.
False
43. Financial markets and intermediaries:
channel savings to real investment

44.A financial intermediary invests in financial assets rather than real

assets *TRUE
45. Corporate managers are expected to make corporate decisions that are in the best
interest of 
the corporation's shareholders
46.Short-term financing transactions commonly occur in the *
MONEY MARKET

47. Which of the following financial assets is least likely to have an active secondary
market 
BANK LOANS MADE TO SMALLER FIRM

48. Which one of these best defines the objective of a well-functioning financial market 
Establishing accurate security prices

49. The asset turnover ratio and inventory turnover ratio are both efficiency ratios
TRUE

50. When corporations need to raise funds through stock issues, they rely on the:
primary market
1. In economics, what term is related to the axiom " curse of competitive market?
2. In finance, what is the input provided by marketing that is also needed in
accounting?
3. What principle in economics is related to the axioms "only changes will count" 
4. What is PSALM?
5. What bridges the gap between the buyer and the seller? *
6. An Economic unit related to public finance
7. To engage in financial asset transformation is called ?
8. In economics, what term is related to the axiom " curse of competitive market?
9. in the axioms risk vs return, what is the form of return in bonds? 
10. In management, what is the term used for incremental cash flow axioms *