1) The success of financial institutions requires an understanding of _____.

a.regulations regarding the maximization of wealth applicable to the corporations

b.regulations that affect these financial institutions

c.the environment-friendly manufacturing methods adopted by various corporations

d.the socially responsible behavior required to be demonstrated by these institutions

e.their accountability in reporting the financial information for a publicly traded company

2) Which of the following accounting principles does theSecurities and Exchange Commission (SEC) require U.S. firms to use when filing their financial statements?

a.International Accounting Standards Board (IASB)

b.International Financial Reporting Standards (IFRS)

c.Generally Accepted Accounting Principles (GAAP)

d.National Advisory Accounting Standards (NAAS)

e.Financial Accounting Standards Principles (FASP)

3) A stock with a dual listing is _____.

a.registered to be traded in more than one money market

b.registered to be traded in the money market as well as the capital market

c.registered to be traded in the debt market and the stock market

d.registered to be traded in more than one capital market

e.registered to be traded in the primary market as well as the secondary market

4) Which of the following statements is correct?

a.The optimal dividend policy is the one that satisfies the shareholders because they supply the firm's capital.

b.The use of debt financing has no effect on earnings per share (EPS) or stock price.

c.The riskiness of projected EPS can impact the firm's value.

d.Stock price is dependent on the projected EPS and the use of debt but not on the timing of the earnings stream.

e.Dividend policy is one aspect of the firm's financial policy that is determined directly by the shareholders.

5) The days sales outstanding (DSO) ratio of a firm identifies:

a.the average length of time a firm must wait after making a credit sale before receiving cash.

b.how effectively the firm uses its plant and equipment to help generate sales.

c.the extent to which a firm's net operating income can safely decline.

d.the profit (earnings) per dollar of sales.

e.how much investors are willing to pay for the firm's stock for each dollar of reported profits.