Financial Management - Study Mode

[#286] What is the most appropriate goal of the firm?
Correct Answer

(A) Shareholder wealth maximization

Explanation

Solution: Shareholder wealth maximization is the most appropriate goal of the firm. Wealth maximization is the concept of increasing the value of a business in order to increase the value of the shares held by stockholders.

[#287] A bond issue is broken up so that some investors will receive only interest payments while others will receive only principal payments, which is an example of ________.
Correct Answer

bundling

Explanation

Solution: A bond issue is broken up so that some investors will receive only interest payments while others will receive only principal payments, which is an example of un-bundling and financial engineering.

[#288] __________ is concerned with the acquisition, financing, and management of assets with some overall goal in mind.
Correct Answer

(A) Financial management

Explanation

Solution: Financial management is concerned with the acquisition, financing, and management of assets with some overall goal in mind. Financial Management is the application of general principles of management to the financial possessions of an enterprise.

[#289] Degree of total leverage can be applied in measuring change in _________.
Correct Answer

(C) EPS to a percentage change in quantity

Explanation

Solution: Degree of total leverage can be applied in measuring change in EPS to a percentage change in quantity. Degree of total leverage is the ratio of percentage change in earnings per share to percentage change in sales revenue.

[#290] Investors can normally afford to assume larger risks in the ____ phase of the life- cycle.
Correct Answer

(B) consolidation

Explanation

Solution: Investors can normally afford to assume larger risks in the consolidation phase of the life- cycle.