Basics of Finance Refreshment Quiz

What is the primary goal of a firm's financial manager?

• Maximizing shareholder wealth

• Maximizing revenue

• Minimizing costs

• Maximizing employee satisfaction

Which of the following is a measure of a firm's profitability?

• Earnings Before Interest and Taxes (EBIT)

• Gross Profit Margin

• Return on Investment (ROI)

• All of the above

What is the time value of money?

• Money's value increases over time

• A dollar today is worth more than a dollar in the future

• Future dollars are worth more than present dollars

• Money has a fixed value over time

Which financial statement provides an overview of a firm's financial position at a specific point in time?

• Income Statement

• Cash Flow Statement

• Balance Sheet

• Statement of Retained Earnings

What is the purpose of financial ratio analysis?

• To assess a firm's liquidity

• To evaluate a firm's profitability

• To measure a firm's solvency

• All of the above

What does the Capital Asset Pricing Model (CAPM) help determine?

• Cost of Debt

• Weighted Average Cost of Capital (WACC)

• Cost of Equity

• Cost of Retained Earnings

Which of the following is a short-term financing option for a firm?

• Common Stock

• Preferred Stock

• Bonds

• Trade Credit

Which one of the following financial securities is considered a long-term investment?

• Bonds

• Commercial papers

• Treasury bills

• None of the above

Which business organization type is owned by a single owner?

• Partnership

• Sole Proprietorship

• Corporation

• Limited Liability Company (LLC)

Which financial market is associated with the initial issuance of securities by corporations?

• Money Market

• Primary Market

• Secondary Market

• Derivatives Market