Question 1

1. 1 -1: A financial manager is responsible for deciding whether an investment in new manufacturing equipment should be financed with debt, preferred stock, or common stock. Which of the following financial management areas would be involved in the decision process? I. Capital budgeting II. Capital structure management III. Working capital management

   	A.	I only
   	B.	II only
   	C.	II and III only
   	D.	I and III only
   	E.	I, II and III

Question 2

1. 1 - 2: The fundamental goal of financial management should be to:

   	A.	Maximize sales.
   	B.	Maximize the current value per share of the existing stock.
   	C.	Avoid financial distress.
   	D.	Maintain steady earnings growth.
   	E.	Maximize profits.

Question 3

1. 1 - 3: Which of the following does NOT address the question: "What are the duties of a financial manager?" I. Deciding how much interest to pay the holders of the corporation's bonds. II. Deciding the mix of long-term debt and equity. III. Deciding which projects a firm should undertake. IV. Deciding how much short-term debt to use.

   	A.	I only
   	B.	III only
   	C.	II and III only
   	D.	II, III, and IV only
   	E.	I, II, III, and IV

Question 4

1. 1 - 4: The mixture of debt and equity used by the firm to finance its operations is called:

   A.

   Working capital management.

   B.

   Financial depreciation.

   C.

   Agency cost analysis.

   D.

   Capital budgeting.

   E.

   Capital structure.

Question 5

1. 2 - 1: The financial statement showing a firm's accounting value on a particular date is the:

   	A.	Income statement.
   	B.	Balance sheet.
   	C.	Statement of cash flows.
   	D.	Tax reconciliation statement.
   	E.	Bank statement.