FOF LECTURE 1

Which type of firm is the most common in the world (in terms of the number of businesses)?

• Sole traders

• Partnerships

• Coporations

• Not‐for‐profit organisations

Which type of firm dominates the economy throughout the world in terms of the total revenue generated?

• Sole traders

• Partnerships

• Corporations

• Not‐for‐profit organisations

What is the maximum number of non‐employee shareholders a private company can have?

• 2

• 3

• 50

• 100

Which of the following is an example of a financial asset?

• Cash

• Accounts receivable

• Goodwill

• An ordinary share

Which of the following is an example of an investment decision?

• Deciding whether to borrow money or issue new shares

• Deciding whether to build a new factory in Australia or New Zealand.

• Deciding whether to increase the level of dividend paid to shareholders.

• None of the above.

Which of the following is an example of a financing decision?

• A mining company deciding whether to deposit surplus cash into a bank account or purchase short‐term securities.

• A manufacturer deciding whether to launch a new product.

• A credit union deciding whether to diversify into the provision of financial advice.

• Pharmaceutical company deciding whether to issue ordinary shares or preference shares to raise capital.

Which of the following is the goal of the financial manager?

• Maximising net profit.

• imising market share.

• Maximising the value of the firm.

• All of the above.

Which of the following is not a way of expressing the goal of the financial manager?

• Maximising the wealth of shareholders.

• Maximising the share price.

• Maximising the value of the firm.

• Maximising the net profit of the firm.

Which of the following is not one of the three critical factors in finance?

• Risk

• Time

• Cash

• Return