Chapter 9 Financial Management Review

What are the funds that a firm uses to acquire its assets and finance its operations?

• Physical assets

• Human resources

• Intellectual property

• Financial capital

Who are some of the possible uses of financial capital?

• Paying bills from suppliers

• Repaying bank loans

• Meeting Payroll expenses

• Paying taxes

What is the functional area of a business that is concerned with finding the best sources and uses of financial capital?

• Marketing

• Finance

• Operations

• Human Resources

What is, historically, the most widely accepted goal of financial management?

• Increase market share

• Maximize the value of the firm to its owners

• Reduce operational costs

• Expand product lines

What is the famous court case that found that a business corporation is organized and carried on primarily for the profit of the stockholders?

• Brown v. Board of Education

• Roe v. Wade

• Dodge v. Ford Motor Company

• Marbury v. Madison

What is the term for a degree of uncertainty regarding the outcome of a decision?

• Loss

• Profit

• Risk

• Gain

What is the observation that financial opportunities that offer high rates of return are generally riskier than opportunities that offer lower rates of return?

• Profit/Loss analysis

• Supply-demand balance

• Cost-benefit analysis

• Risk-return trade-off

What is a low risk, low return investment and what is the average return?

• 3 month Treasury bills, about 3.5%

• Corporate bonds, about 5.00%

• Real estate, about 7.00%

• Mutual funds, about 6.50%

What is a high risk, high return investment and what is the average return?

• S & P 500 Stocks, about 11.5%

• Government bonds, about 4.00%

• Savings account, about

  1.00%

• Gold, about 8.00%

What is it called when you compute ratios that compare values of key accounts listed on a firm’s financial statements?

• Cost analysis

• Market analysis

• Financial ratio analysis

• Break-even analysis