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Chapter 1 Getting Started-Principles of Finance 1.1 Finance An Overview 1) Which of the following statements best represents what finance is about A) How political, social, and economic forces affect corporations B) Maximizing profits C) Creation and maintenance of economic wealth D) Reducing risk Answer C Diff 1 Topic 1.1 Finance An Overview Keywords what is finance Principles Principle 3 Cash Flows Are the Source of Value 2) The goal of the firm should be A) maximization of profits. B) maximization of shareholder wealth. C) maximization of consumer satisfaction. D) maximization of sales. Answer B Diff 1 Topic 1.1 Finance An Overview Keywords shareholder Principles Principle 3 Cash Flows Are the Source of Value 3) Which of the following factors enable a public corporation to grow to a greater extent, and perhaps at a faster rate, than a partnership or a proprietorship A) Unlimited liability of shareholders B) Access to the capital markets C) Limited life D) Elimination of double taxation on corporate income E) All of the above Answer B Diff 2 Topic 1.1 Finance An Overview Keywords corporation 4) Which of the following reasons is most responsible for corporations being the most important form of business organization in the United States A) Corporations have limited life. B) Stockholders have unlimited liability. C) Corporations are subject to less government regulation than the other forms of business organization. D) Corporations have the ability to raise larger sums of capital than the other forms of business organization. E) Corporations are subjected to less taxation than the other forms of business organization. Answer D Diff 2 Topic 1.1 Finance An Overview Keywords corporation 5) Difficulty in finding profitable projects is due to A) social responsibility. B) competitive markets. C) ethical dilemmas. D) opportunity costs. Answer B Diff 2 Topic 1.1 Finance An Overview Keywords competitive markets Principles