. TRUE / FALSE QUESTIONS Enter True or False on the blank preceding each question. ______ 1. Finance can be defined as the art and science of managing money. ______ 2. The field of Finance is an outgrowth of philosophy, which dates back to the 16th century. ______ 3. The primary principle used by financial managers when making decisions is marginal cost/benefit analysis. ______ 4. The Sarbanes-Oxley Act of 2002 established an oversight board to monitor the accounting industry. ______ 5. A disadvantage of the sole proprietorship form of business organization is that it is more expensive to organize a business in this way vs. the other forms of business organization. ______ 6. Among all of the firms in the U.S., nearly three-fourths of them are organized as corporations. ______ 7. Earnings of corporations in the U.S. are now taxed at a flat 21% rate. ______ 8. A capital gain results when a firm sells an investment for less than its original purchase price. ______ 9. For corporations only, 10% of the dividend income received from investment in the stock of another corporation is excluded from taxation. ______ 10. A corporations financial statements are prepared according to the requirements of the Generally Accepted Accounting Principles (GAAP). ______ 11. Both the Current Ratio and the Quick Ratio measure a firms liquidity. ______ 12. For both the firms Inventory and its Accounts Receivable, it is desirable for the turnover rates of these accounts to have low values. ______ 13. The less debt a corporation uses to finance its Total Assets, the greater its financial leverage. ______ 14. Most managers are risk-averse, as for a given increase in risk, they require an increase in return. ______ 15. The standard deviation can be used to measure the risk associated with a given asset. It measures the dispersion of the assets possible returns around the assets expected return. ______ 16. In general, the higher the positive correlation between the returns for a given set of assets, the greater the reduction In risk that the investor can achieve by investing in these assets.