| Questions |
True |
False |
|
|
|
| Financial leverage is calculated as ( Sales -Variable cost ) / ( Earnings before Interest and tax -Interest ) |
|
False |
| Earnings per share is of great significance to an operator on the stock exchange buying and selling the shares. |
|
False |
| Capital structure determines the level of current assets that is required to maintain the firm’s operational level. |
|
False |
| Determining when a supplier should be paid is a capital structure decision. |
|
False |
| Establishing the accounts receivable policies is a capital structure decision. |
|
False |
| Capital structure determines how much risk is associated with the future cash flows of a project. |
|
False |
| Deciding if a new project should be accepted is a working capital decision. |
|
False |
| When evaluating a project in which a firm might invest, the size but not the timing of the cash flows is important. |
|
False |
| Maximization of the current earnings of the firm is the main goal of the financial manager. |
|
False |
| The primary goal of a financial manager should be to maximize the value of shares issued to new investors in the corporation. |
|
False |
| The primary goal of financial management is to minimize the corporate tax liability. |
|
False |
| Control of the firm ultimately rests with board of directors. They elect the management, who, in turn, lead the company. |
|
False |
| The Sarbanes-Oxley Act was intended to increase corporate social responsibility of publicly listed organizations. |
|
False |
| Unethical behaviour does not impact volatility of the stock markets. |
|
False |
| When owners are managers (such as in a sole proprietorship), a firm will have agency costs. |
|
False |
| More stock trading in the U.S. occurs in over-the-counter markets rather than onorganized exchanges |
|
False |
| Electronic Communications Networks apply technology to make organized exchangesmore efficient and speedy. |
|
False |
| All stocks pay dividends, as that is the only way an investor can profit from holding stock. |
|
False |
| The Dow Jones Industrial Average is the broadest and best indicator of the stock market’sday-to-day performance. |
|
False |
| About half of new equity issues are preferred stock. |
|
False |
| A stock’s market value will be higher the higher is the investor’s required rate of return. |
|
False |
| A firm should continue to increase its level of capital investment so long as the rate of return on the least profitable investment project that the firm undertakes is less than the marginal cost of capital. |
|
False |
| In calculating net cash flows, depreciation is treated as a cost. |
|
False |
| In general, a firm should undertake any project that has an internal rate of return that is positive. |
|
False |
