PLEASE ANSWER THE QUESTIONS BELOW

Question 1. "Shareholder wealth" in a firm is represented by:

• a) the number of people employed in the firm
• b) the book value of the firm's assets less the book value of its liabilities
• c) the amount of salary paid to its employees.
• d) the market price per share of the firm's common stock.

Question 2 The long-run objective of financial management is to:

• a) maximize earnings per share.
• b) maximize the value of the firm's common stock.
• c) maximize return on investment
• d) maximize market share.

3. What are the earnings per share (EPS) for a company that earned RM. 100,000 last year in after-tax profits, has 200,000 common shares outstanding and RM. 1.2 million in retained earning at the year end?

• a) RM100,000
• b) RM 6.00
• c) RM 0.50
• d) RM 6.50

4. A(n) ................. would be an example of a principal, while a(n)................. would be an example of an agent.

• a) shareholder; manager
• b) manager; owner
• c) accountant; bondholder
• d) shareholder; bondholder

5. The market price of a share of common stock is determined by:

• a) the board of directors of the firm.
• b) the stock exchange on which the stock is listed. Option 2
• c) the president of the company
• d) individuals buying and selling the stock.
• Option 5

6. ____________________ and __________________________ are the two versions of goals of the financial management of the firm.

• a) Profit maximisation, Wealth maximization
• b) Production maximisation, Sales maximisation
• c) Sales maximisation, Profit maximization
• d) Value maximisation, Wealth maximisation

7. Which stakeholders have the highest motivation to take risky but value-enhancing investments for the firm?

• A. Suppliers
• B. Creditors
• C. Shareholders
• D. A salaried CEO

8. All the following functions are the five basic corporate finance functions except:

• A. External financing function
• B. Capital budgeting function
• C. Risk management
• D. Auditing

9. The decision function of financial management can be broken down into the capital budgeting, cash management, and credit management

• A. decisions.financing and investmentinvestment,
• B. financing, and asset management
• C. financing and dividend
• D. capital budgeting, cash management, and credit management

10. Which of the following enjoys limited liability?

• A. A general partnership.
• B. A corporation.
• C. A sole proprietorship.
• D. None of the above.

11. Michael Cohn is a "member" (a type of owner) of a marine supply business. Michael's business is

• A. a sole proprietorship
• B. a corporation.
• C. a limited liability company.
• D. a general partnership.

12. A corporation in which you are a shareholder has just gone bankrupt. Its liabilities are far in excess of its assets. You will be called on to pay:

• A. a proportionate share of bondholder claims based on the number of common shares that you own
• B. a proportional share of all creditor claims based on the number of common shares that you own
• C. an amount that could, at most, equal what you originally paid for the shares of common stock in the corporation
• D. Nothing
• Option 3

13 A 30-year bond issued by Geloma Bhd in 2007 would now trade in the

• A. primary money market.
• B. secondary money market.
• C. primary capital market.
• D. secondary capital market.

14. Money market mutual funds

• A. enable individuals and small businesses to invest indirectly in money-market instruments.
• B. are available only to high net-worth individuals.
• C. are involved in acquiring and placing mortgages.
• D. are also known as finance companies.