A. TRUE/FALSE QUESTIONS Enter "True" or "False" on the blank preceding each question. 11. "Financial Services" is the area of Finance concerned with the design and delivery of advice and financial products to individuals, businesses, and government 2. Increasing globalization has simplified the Finance function, particularly due to the use of multiple world currencies. In Finance, the focus when making financial decisions is typically on the accrual method of accounting 4. "Stakeholders include all groups of individuals who have a direct economic link to the form 5. Whenever a manager owns less than 100% of the corporation's stock, a potential agency problem exists. 6. The great majority of all firms in the United States are organised as corporations. Shareholders' Equity" listed on a corporation's Balance Sheet represents the amount that the firm has borrowed and must repay. A firm's liquidity ratios can provide early warning signs of cash flow problems for the firm. The goal of the "Inventory Turnover Ratio" and the "Accounts Receivable Turnover Ratio" is to have a low of a turnover rate value as possible. T_10. The more debt that a firm uses in relation to its "Total Assets," the greater its financial leverage 1__11. On a "common-size" Income Statement, each account is expressed as a percentage of the firm's "Net Income" in 2. given 12. The stocks of firms that are expected to perform well typically sell at a higher "Market Book Ratio." 13. Historically, U.S. Treasury Bonds have been the most risky investment, as measured by their higher standard deviation of returns vs. the standard deviation of other securities 14. For a "normal probability distribution,"95% of the outcomes lie +/- one standard deviation from the expected return value. 15. An "efficient portfolio" provides the maximum level of return for a given level of risk. 16. Over long periods of time, the returns earned on internationally diversified portfolios tend to be superior to returns on portfolios that contain only domestic (ie, one country) investments B. MULTIPLE CHOICE QUESTIONS For each question, enter the letter of the best response on the blank preceding the question. 17. Finance is concerned with A how firms raise money from investors B. how firms invest money to seek a profit. c. whether to re-invest profits into the firm or distribute them as dividends to shareholders D. A and B and C