1. Which is NOT the primary concern of the financial manager?

1. Raising funds for the firm to finance its assets in the best possible way.
2. Determining how much debt funds to be employed by the firm.
3. Seeing that the financial statements of the firm are properly presented.
4. Finding the right proportion of investment in long-term assets.

2. Important functions of financial management are:

1. To control expenditures of day to day operations of the business.
2. To identify desirable investment in fixed and current assets.
3. To provide for adequate financing.
4. All of the above.

3. The agency problem is _________.

1. a result of the separation between management and owners of the firm.
2. not important in pursuing the goal of wealth maximization.
3. associated with ensuring the safety of the management as the agent of shareholders.
4. Likely to be importance in profit maximization.

4. Today, the financial managers major concern is ___________.

1. managing and controlling the firms financial operations.
2. assessing the condition and performance of other firms.
3. constantly monitoring the firms value.
4. raising capital.

5. Which of the following is NOT a true statement about the goal of maximizing shareholders wealth?

1. It takes into account the timing of cash flows.
2. It is a short-run point of view which takes risk into account.
3. It considers risk as a factor.
4. None of the above.

6. A use of cash would be ________ in fixed assets or _________ in short-term debt.

1. a decrease; a decrease
2. an increase; a decrease
3. a decrease; an increase
4. an increase; an increase

7. A source of cash would be ________ in preferred stock or _________ in fixed assets.

1. a decrease; a decrease
2. an increase; a decrease
3. a decrease; an increase
4. an increase; an increase

8. One of the major drawbacks of a sole proprietorship is __________.

1. low organizational costs.
2. easy to make decision.
3. low operating costs.
4. unlimited liability to the owner.

9. A corporation is __________.

1. An entity owned by shareholders.
2. an entity with limited liability privilege.
3. a separate legal entity.
4. All of the above.

10. By looking at the statement of cash flows, which of the following issues will be analyzed by the management of a firm?

1. Whether the firm is able to pay cash dividend.
2. How the firm financed an investment in additional fixed assets.
3. How much of the short-term debt is being used to finance fixed assets.
4. All of the above.