1. To minimize transaction exposure, firms may pursue which of the following activities:
a) forward exchange market hedging
b) money market hedging
c) currency futures market hedging
d) all of the above are correct.
2. The ultimate measure of performance is:
a) the amount of the firm's earnings
b) how the earnings are valued by the investor
c) the firm's profit margin
d) return on the firm's total assets
3. Financial markets:
a) exist as a vast global network of individuals and financial institutions
b) include a broad group representing lenders, borrowers, owners, institutional investors, corporations,
government units and others
c) circulate information quickly that affects prices of securities
d) all of the above
4. The income statement measures:
a) what the firm owns and how those assets are financed
b) the profitability of the firm at a given point in tim
c) the profitability of the firm over a period of time
d) how changes in the balance sheet are financed over time
5. All of the following are examples of tax deductible expenses, except:
a) dividends on common shares
b) interest payments
c) amortization charges
d) sales and administrative expenses
6. Which of the following is not the responsibility of financial management?
a) allocation of funds to current and capital assets
b) obtaining the best mix of financing alternatives
c) preparation of the firm's accounting statements
d) development of an appropriate dividend policy
7. The allocation of capital is determined by:
a) expected rates of return
b) the Bank of Canada
c) the initial sale of securities in the primary market
d) the size of the federal debt
8. All of the following are true of shareholders' equity except:
a) it represents the combined total of the firm's current and long term assets
b) it represents the total contribution and ownership interest of preferred and common shareholders
c) the three basic components are preferred stock, common stock, and retained earnings
d) it represents the difference between the firm's assets and liabilities
9. Asset utilization ratios measure:
a) the speed at which the firm is turning over its assets
b) the ability of the firm to earn on adequate return on sales, total assets, and invested capital
c) the firm's ability to pay off short term obligations as they are due
d) the debt position of the firm in light of its assets and earning power
10. Among the liquidity ratios, one would include:
a) receivables turnover and inventory turnover
b) current ratio and quick ratio
c) capital asset turnover and total asset turnover
d) receivables turnover and total asset turnover