Financial Management Principles and Applications 8th Edition By Sheridan Titman test bank

Answer: C
Which of the following goals is in the best long-term interest of shareholders?
 Profit maximisation
 Risk minimisation
 Maximising of the market value of the existing shareholders’ common stock
 Maximising sales revenues
Difficulty: Moderate
AACSB: 6. Reflective thinking
Learning Objective: 1.3 Understand the role of the financial manager within the firm and the goal for making financial choices
Answer: C
If managers do not pursue the goal of maximising shareholder wealth [blank].
 they concentrate on more important matters like growing market share
 they can focus more on social responsibilities
 they are likely to lose their jobs
 they can focus more on long-term profitability
Difficulty: Moderate
AACSB: 6. Reflective thinking
Learning Objective: 1.3 Understand the role of the financial manager within the firm and the goal for making financial choices
Answer: C
The case of Tony Faddell and the MP3 player is an illustration of how [blank].
a management team’s investment decision can positively affect a firm’s total value
becoming a lean retailer through end-to-end process and systems excellence
maximising wealth of shareholders is more important than doing the right thing for stakeholders
lack of financial ethics can cost investors billions of dollars
Difficulty: Moderate
AACSB: 6. Reflective thinking
Learning Objective: 1.3 Understand the role of the financial manager within the firm and the goal for making financial choices
Answer: A
Managers of corporations need to act in an ethical manner [blank].
 because ethics violations will be punished by the law
 because a business must be trusted by investors, customer and the public if it is to succeed
 because business managers must answer to a higher authority
 because ethical behaviour is its own justification
Difficulty: Moderate
AACSB: 6. Reflective thinking
Learning Objective: 1.3 Understand the role of the financial manager within the firm and the goal for making financial choices
Answer: B
 [blank] are the principal owners of a corporation.
 Shareholders
 Managers
 Employees
 Suppliers
Difficulty: Moderate
AACSB: 6. Reflective thinking
Learning Objective: 1.3 Understand the role of the financial manager within the firm and the goal for making financial choices
Answer: A
In 2002, following serious ethical violations by corporations such as Enron, the United States Congress passed the [blank].
 Dodd–Frank Act
 Insider Trading Act of 1988
 Sarbanes–Oxley Act
 Bank Integration Act of 1901
Difficulty: Moderate
AACSB: 6. Reflective thinking
Learning Objective: 1.3 Understand the role of the financial manager within the firm and the goal for making financial choices
Answer: C
Most criticism of legislation aimed at preventing corporate collapses and scandals has focused on [blank].
 the excessive cost of compliance
 inadequate penalties for violations
 diminished competitiveness of US corporations in international markets
 decreased confidence in financial reporting
Difficulty: Moderate
AACSB: 2. Ethical understanding and reasoning
Learning Objective: 1.3 Understand the role of the financial manager within the firm and the goal for making financial choices
Answer: A
Which act mandates that Australian CEOs and CFOs must affirm in writing that company financial statements are ‘true and fair?’
 The Corporate Law Economic Reform Program Act 2004
 The Insider Trading Act of 1988
 The Sarbanes–Oxley Act
 The Bank Integration Act of 1901
Difficulty: Moderate
AACSB: 2. Ethical understanding and reasoning
Learning Objective: 1.3 Understand the role of the financial manager within the firm and the goal for making financial choices
Answer: A
The Sarbanes–Oxley Act of 2002 [blank].
 protects managers of publicly held corporations from frivolous lawsuits for unethical behaviour
 prohibits managers of publicly held corporations from personally profiting from non-public information
 holds those who influence corporate decisions legally accountable for unethical conduct
 allows corporate accountants greater latitude in the application of generally accepted accounting principles
Difficulty: Moderate
AACSB: 2. Ethical understanding and reasoning
Learning Objective: 1.3 Understand the role of the financial manager within the firm and the goal for making financial choices
Answer: C
It is impossible to write a perfect contract.
True
False
AACSB: 6. Reflective thinking