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10 Cards in this Set

  • Front
  • Back
Which of the following did not contribute to the financial crisis?

A) The change from mark-to-market accounting to

B) Solid credit ratings from the ratings agencies

C) The extension of credit to high-risk borrowers

D) The takeover of JPMorgan Chase by Bear Sterns
Professor Merton Miller received the Nobel prize in economics for his work on?

A) Dividend policy

B) Working capital management

C) Investment theory

D) Capital structure theory
Professors Harry Markowitz and William Sharpe received their Nobel prize in economics for their contributions to the?

A) Theories of risk-return and portfolio theory.

B) Options pricing model.

C) Theories of working capital management.

E) Theories of international capital budgeting.
Many companies such as Tyco, Enron, and World Com that suffered financial distress in the late 1990s and early 2000s,

A) Committed fraud.

B) Had failed corporate governance oversight.

C) Went bankrupt.

D) All of these are true.
Which of the following is not a true statement about the goal of maximizing shareholder wealth?

A) It takes into account the timing of cash-flows.

B) It is a short-run point of view which takes risk into account.

C) It considers risk as a factor.

D) None of these.
Capital markets do not include which of the following securities?

A) Commercial paper

B) Government bonds

C) Preferred stock

D) Common stock
A corporate buy-back, or the repurchasing of shares, is?

A) An example of balance sheet restructuring.

B) An excellent source of profits when the firm's stock is over-priced.

C) A method of reducing the debt-to-equity ratio.

D) All of these.
Increased productivity due to technology has?

A) Helped to keep corporate costs in check.

B) Made it cheaper (in terms of interest costs) for firms to borrow money.

C) Increased corporations' reliance on debt for capital expansion needs.

D) Created larger asset values on the firm's historical balance sheet.
The entity that is responsible for establishing the allocation and cost of capital is?

A) The economy

B) The corporation

C) Customers

D) Investors
Regarding risk levels, financial managers should?

A) Focus primarily on market fluctuations

B) Pursue higher risk projects because they increase value

C) Evaluate investor's desire for risk

D) Avoid higher risk projects because they destroy value