True/False Quiz

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Chapter 1:   The Role of Financial Management

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1. Financial managers of today have fewer responsibilities than their counterparts of the early 20th century.

2. Rapid technological change and worldwide economic uncertainty are factors that may affect the job of the financial manager.

3. A goal or objective is a necessary first step for effective financial management.

4. Deciding on the total amount of assets needed by the firm is a key step in the investment decision.

5. The goal of the firm should be to maximize earnings per share.

6. In a large corporation, the firm's owners are usually also its top managers.

7. Corporate management, acting as the owners' agent, makes all decisions in the owners' best interests.

8. Maximizing the price of a share of the firm's common stock is the equivalent of maximizing the wealth of the firm's present owners.

9. Corporate Social Responsibility (CSR) is usually in conflict with the objective of shareholder wealth maximization.

10. The price of a share of common stock acts as a barometer indicating how well management is doing on behalf of shareholders.

11. The stakeholders of a corporation are all constituencies with a stake in the fortunes of the company. They include shareholders, creditors, customers, employees, suppliers, and local communities.

12. In the US, the Public Company Accounting Oversight Board (PCAOB) appoints the chairman and the members of the Securities and Exchange Commission (SEC).

13. It is much more common in the US to have a company's CEO serve as chairman of the board of directors than it is in the UK.
The following item is NEW to the 13th edition.

14. Sustainability is usually in conflict with the idea of Corporate Social Responsibility (CSR).

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