Question 1

There are financial implications in virtually all business decisions,and non-financial executives must understand the financial implications of the decisions they make.

Accepted Answer

Financial implications are an important aspect of business decisions, and even non-financial executives must consider the financial implications of their decisions. Hence, the statement is true.

Question 2

During the depression era of the 1930s,the emphasis of managerial finance was developing sophisticated analytical models used to determine the liquidity and value of firms.

Accepted Answer

During the depression era of the 1930s, the emphasis of managerial finance was more on survival of firms, focusing on issues like bankruptcy, liquidity, and reorganization, rather than on developing sophisticated analytical models.

Question 3

The well-developed financial markets that exist in the United States have allowed us to achieve a higher standard of living than would otherwise be possible.

Accepted Answer

Developed financial markets provide access to capital, facilitate investments, and allow for efficient allocation of resources, which can drive economic growth and increase living standards. Therefore, it is true that the well-developed financial markets in the United States have contributed to a higher standard of living for its citizens.

Question 4

At the beginning of the twentieth century,for the most part,the only investments available to individual investors were corporate stocks and bonds;but,today,there are a significantly greater number of investment choices because investors' demands have changed.

Accepted Answer

At the beginning of the twentieth century, individual investors had access to a variety of investment options beyond corporate stocks and bonds, including government bonds, municipal bonds, and even commodities like gold. The expansion of investment choices over time is more due to financial innovation and regulatory changes than solely to changes in investors' demands.

Question 5

The three main functions in the investments area are sales,the decisions that firms make concerning their cash flows,and determining the optimal mix of securities for a given investor.

Accepted Answer

The three main functions in the investments area are typically identified as security analysis, portfolio management, and market analysis.

Question 6

The history of banking in the United States is one of continuous regulation to ensure the safety of our banking institution.For this reason,little deregulation has taken place.

Accepted Answer

The history of banking in the United States has experienced periods of deregulation, such as in the 1980s with the deregulation of the savings and loan industry and the repeal of the Glass-Steagall Act in 1999. However, such periods have often been followed by increased regulation after financial crises. So, the statement "little deregulation has taken place" is not entirely true.

Question 7

Throughout the twentieth century,the banking industry has often been the subject of a great deal of regulation,much of which has placed banks at a competitive disadvantage compared with other financial institutions in the United States and other banks throughout the world.

Accepted Answer

The answer of Throughout the twentieth century,the banking industry has...

Question 8

In the early 1900s the emphasis of managerial finance was on the legal aspects of mergers,the formation of new firms,and the various types of securities firms could issue to raise funds.

Accepted Answer

This statement is true. In the early 1900s, managerial finance was focused on the legalities of mergers, firm formation, and securities issuance to generate funds.

Question 9

Historically,in the United States,after the country has experienced economic or financial tragedy,cries for new,tougher regulations become abundant,and politicians are generally quick to enact new legislation to take what they think are corrective actions.

Accepted Answer

This has been the trend in the United States throughout history, with examples such as the Great Depression leading to the creation of the Securities and Exchange Commission and the Glass-Steagall Act, and the 2008 financial crisis leading to the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Question 10

To achieve success in the financial services industry,one needs a knowledge of the factors that cause interest rates to rise and fall,the regulations to which financial institutions are subject,and the various types of financial instruments.

Accepted Answer

Knowledge of these factors is essential for success in the financial services industry.

Question 11

In the early 1900s,the investments arena was dominated by a small group of very wealthy investors and opulent corporations.

Accepted Answer

This is true. During this time, the stock market was not yet accessible to the average person, and the majority of investments were made by wealthy individuals and large corporations.

Question 12

During the 1930s,investment experts suggested that stock value should be determined by computing the present value of the future cash flows associated with the stock.

Accepted Answer

The answer of During the 1930s,investment experts suggested that stock...

Question 13

The financial manager interacts jointly with many different individuals and departments within the firm.Forecasting and planning,as well as coordination and control,are two of the major areas of responsibility where this interaction takes place.

Accepted Answer

The answer of The financial manager interacts jointly with many...

Question 14

A major reason there has been a great deal of deregulation in the banking industry since the 1970s is due to the emergence of nonbank organizations and the need to increase competitiveness of U.S.banks and other financial institutions.

Accepted Answer

The answer of A major reason there has been a...

Question 15

The financial manager must execute his or her duties independent of the other activities of the firm in order to properly maximize the value of the firm.

Accepted Answer

The financial manager must work closely with other parts of the firm (such as marketing, operations, and human resources) to ensure that financial decisions are made with a comprehensive understanding of the firm's overall strategy and operations, aiming to maximize the value of the firm. Independence in decision-making does not equate to isolation from other business functions.

Question 16

If you pursue a business career in a nonfinance profession you will not be exposed to finance concepts on the job.

Accepted Answer

Even if you pursue a business career in a nonfinance profession, you may still encounter finance concepts in your work, such as budgeting, forecasting, pricing strategies, and financial analysis. It is important to have a basic understanding of finance to be able to make informed business decisions.

Question 17

In general,the role of the financial manager is to plan for the acquisition and use of funds in order to maximize the value of the firm.

Accepted Answer

The role of the financial manager involves making decisions that aim to maximize the value of the firm, which means planning for the acquisition and use of funds in a way that benefits the company and its shareholders. This includes financial planning, budgeting, investing, risk management, and other activities that affect the financial position and performance of the organization.

Question 18

Coordination of the finance function and the marketing function is critical to the success of newly formed companies which must generate enough cash to survive

Accepted Answer

The answer of Coordination of the finance function and the...

Question 19

The finance function is fairly independent of most other corporate functions.Marketing decisions,for example,might affect the firm's need for funds but are not affected by conditions in financial markets or other financing issues.

Accepted Answer

The statement is false. The finance function is closely linked with other corporate functions such as marketing, operations, and strategy. Financial decisions are affected by various factors such as market conditions, financing issues, and capital structure which are influenced by other corporate functions.

Question 20

Much of the recent legislation enacted by the government has focused on the regulating of previously unregulated industries such as financial services and utilities.

Accepted Answer

Recent legislation often continues to regulate industries like financial services and utilities, which have been under regulatory scrutiny for many years, rather than focusing solely on previously unregulated sectors.

Quiz 1: An Overview of Finance