1.The MAJOR objective of the corporation is Required to answer. Single choice.

Maximize the profit

Maximize shareholders value

Maximize sales revenue

Maximize company's earnings

2.An alternative to a shareholder based view of the corporation is....Required to answer. Single choice.

Stakeholder view

Corporation view

Agent view

Islamic view

3.The directors pursuing their own interests rather than shareholders interestsRequired to answer. Single choice.

Corporate Problem

Shareholder Problem

Agency Problem

Board of Director Problem

4.Whether or not an investment is accepted should depend on whether the NPV isRequired to answer. Single choice.

Zero

Positive

Negative

All options are incorrect

5.All cash flows that are directly or indirectly arise as a result of accepting a projectRequired to answer. Single choice.

Operating cash flow

Investing cash flow

Financing cash flow

All incremental after-tax cash flow

6.The most common view of the capital market isRequired to answer. Single choice.

Capital asset pricing model (CAPM)

Arbitrage pricing theory (ABT)

Fama-French Theory

Black-Scholes Theory

7.The risk that arises from market conditions and CANNOT be diversified awayRequired to answer. Single choice.

Systematic risk

Specific risk

Political risk

Total risk

8.The summation of systematic risk and specific risk is calledRequired to answer. Single choice.

Systematic risk

Total risk

Specific risk

Inflation risk

9.The firm's choice to their mix of capital (all equity, all debt, mix debt & equity)Required to answer. Single choice.

Cost of capital

Capital budgeting

Capital structure

Capitalization

10.The classic theory in capital structure is developed byRequired to answer. Single choice.

Modigliani & Miller

Black & Scholes

Fama & French

Stiglitz

11.The company's alternative either to retain their free cash flow or pay out as dividendRequired to answer. Single choice.

Financing policy

Dividend policy

Investing policy

Operating policy

12.Firms issue additional shares rather than cash to their shareholdersRequired to answer. Single choice.

Cash dividend

Stock splits or stock dividends

No dividend

Retained earnings

13.The quantity of debt compared to the quantity of equityRequired to answer. Single choice.

Leverage

Liquidity

Profitability

Solvability

14.The discount rate in the NPV formula for project appraisal isRequired to answer. Single choice.

Cost of debt

Cost of equity

Cost of capital or WACC

Cost of fund

15.Modigliani and Miller (MM) is one of the nobel laureate in finance fieldRequired to answer. Single choice.

TRUE

FALSE

16.The other terminology for leverage is "gearing"Required to answer. Single choice.

TURE

FALSE

17.The benefit of focusing on free cash flow is NO LONGER debatedRequired to answer. Single choice.

TRUE

FALSE

18.Equity financing carries HIGHER RISK than debt financingRequired to answer. Single choice.

TRUE

False

19.Debt financing generally very secure (low risk)Required to answer. Single choice.

True

False

20.According to MM, in perfect capital market, dividend policy is IRRELEVANTRequired to answer. Single choice.

True

False