Final Exam Version 1

) What is the primary goal of financial management?

A.

Minimizing risk of the firm

B.

Maximizing shareholder wealth

C.

Increased earnings

D.

Maximizing cash flow

2) Regarding risk levels, financial managers should

A.

evaluate investor's desire for risk

B.

focus primarily on market fluctuations

C.

pursue higher risk projects because they increase value

D.

avoid higher risk projects because they destroy value

3) Maximization of shareholder wealth is a concept in which

A.

optimally increasing the long-term value of the firm is emphasized.

B.

virtually all earnings are paid as dividends to common stockholders.

C.

increased earnings is of primary importance.

D.

profits are maximized on a quarterly basis.

4) An increase in...