Finance multi-choice questions -content– 1. Since stock price can be manipulated by the financial manager through stock buybacks and other informational signaling, maximizing shareholder wealth is a simple task. A) True B) False 2. Institutional ownership is sought after by new, fast moving organizations because it provides a stable and respected ownership base. A) True B) False 3. A company can sell their shares in the secondary market by using a syndicate. A) True B) False 4. Liquidity is nearer to a cash position, and more of it is always desired by the company, bondholders and shareholders alike. A) True B) False 5. A pro-forma statement is a financial prediction of the future. A) True B) False 6. Changes in the stock price and the number of shares available will evoke changes in the market cap. A) True B) False 7. With the exception of an IPO, the firms value is set by the market through the laws of supply and demand. A) True B) False 8. Uncertain financial or interest rate environments create event risk for the firm. A) True B) False 9. In the NETSCAPE video, the issue of “currency for acquisition” referred to the shares of the firm being used to buy other companies. A) True B) False 10. Business risk is non-diversifiable and all firms are exposed to it. A) True B) False 11. Shrouded in controversy over it’s value, the firms price/earnings ratio is still one of the most commonly used and quoted valuation ratios. A) True B) False 12. One of the reasons for the financial meltdown recently was the collapse of the real estate market. A) True B) False 13. Stock buybacks raise your stock price while lowering the number of shares available in the open market. A) True B) False 14. One valuation technique should be used universally and consistently for all valuation decisions. A) True B) False 15. In capital rationing involving NPV, an investment can never be split, as the decision must be to accept or reject in total. A) True B) False 16. The payback method is still the most frequently used system of evaluating investment alternatives probably due to ease of understanding. A) True B) False 17. Diagram the business cycle and the effects on individual industries. Why is an index measuring Christmas sales so important? Is the business cycle controllable? What role does a counter-cyclical play? HINT: To diagram the business cycle, be sure to select the rich text/HTML format option for text editing.

2016-09-21