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Pre-Test
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1
Business finance includes determining which long-term assets a firm should purchase.
A)True
B)False
2
Working capital includes cash, inventory, and accounts payable.
A)True
B)False
3
Working capital management includes determining:
A)whether or not a firm should sell some of its older equipment.
B)how much inventory a firm should keep on hand.
C)which lender offers the most appropriate loan for a project.
D)the size and timing of the cash flows of a proposed new project.
E)whether or not a firm should issue additional shares of common stock.
4
Capital structure refers to the:
A)types of equipment a firm employs in its production process.
B)mixture of short-term and long-term debt a firm uses to finance its operations.
C)amount of long-term debt and equity a firm uses.
D)composition of a firm's short-term assets.
E)size, timing, and risk of a firm's future cash flows.
5
Which one of the following statements about finance is correct?
A)Only persons employed in the finance department of a firm need to understand finance.
B)Financial analysis is frequently based on accounting information.
C)Finance affects your business life but not your personal life.
D)Finance is usually categorized into three main areas which are corporate finance, international finance and financial institutions.
E)There are very limited career options in the field of finance.
6
Assume that a company employs both a treasurer and a corporate controller. Which one of the following responsibilities would be assigned to the controller?
A)cash management
B)credit management
C)cost accounting management
D)capital expenditure management
E)financial planning
7
On a typical day in the U.S., the largest dollar volume of trading in the auction markets occurs:
A)in the OTC markets.
B)on the New York Stock Exchange (NYSE).
C)on the American Stock Exchange (AMEX).
D)on the Pacific Stock Exchange (PSE).
E)on NASDAQ.
8
Capital budgeting is the process of:
A)determining how to raise the money required to fund a project.
B)choosing how much cash to keep on hand.
C)deciding the amount of earnings that a firm should retain.
D)planning and managing a firm's long-term investments.
E)deciding which marketable securities to purchase.
9
Unethical business behavior:
A)is sometimes a matter of personal opinion.
B)is defined as those activities which by nature are illegal.
C)is limited to the United States.
D)always involves the financial statements of a firm.
E)is acceptable when it increases the value of the company's stock.
10
Which of the following are stakeholders in a firm?
I. employees
II. Customers
III. Stockholders
IV. government
A)I and II only
B)III only
C)I and III only
D)II and IV only
E)I, II and IV only





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Ross: Ess of Corp Finance 6eOnline Learning Center

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