TRUEFALSE - Write T if the statement is true and F if the statement is false.

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TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false.1) As finance emerged as an analytical, decision-oriented discipline, the initial emphasis was placed on capital acquisitions.⊚ true ⊚ false

2) Inflation is assumed to be a temporary problem that does not affect financial decisions.⊚ true ⊚ false

3) Timing is not a particularly important consideration in financial decisions.⊚ true ⊚ false

4) Institutional investors have had increasing influence over corporations with their ability to vote large blocks of stock and replace poor performing boards of directors.⊚ true ⊚ false

5) Insider trading involves the use of information not available to the general public to make profits from trading in a company's shares.⊚ true ⊚ false

6) Agency theory assumes that corporate managers act to increase the wealth of corporate shareholders.⊚ true ⊚ false Chapter 1 (Foundations of Financial Management, 12e (Canadian Edition) Stanley Block, Geoffrey Hirt, Bart Danielsen, Doug Short, Michael Perretta) (Test Bank, Answer at the end of each Chapter) 1 / 4

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7) Historically the field of finance as a discipline described capital preservation, liquidity, reorganization, and bankruptcy through the 1930s depression.⊚ true ⊚ false

8) The higher the profit of a firm, the higher the value the firm is assured of receiving in the market.⊚ true ⊚ false

9) Social responsibility and profit maximization are synonymous.⊚ true ⊚ false

10) There is unlimited liability in a general partnership.⊚ true ⊚ false

11) In the mid-1950s, finance began to change to a more analytical, decision-oriented approach.⊚ true ⊚ false

12) There are some serious problems with the financial goal of maximizing the earnings of the firm.⊚ true ⊚ false

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Version 1 3 13) Maximizing the earnings of the firm is the goal of financial management.⊚ true ⊚ false

14) Because socially desirable goals can impede profitability in many instances, managers should not try to operate under the assumption of wealth maximization.⊚ true ⊚ false

15) The sole proprietorship represents single-person ownership and offers the advantages of simplicity of decision making and low organizational and operating costs.⊚ true ⊚ false

16) Profits of sole proprietorships are taxed at corporate tax rates.⊚ true ⊚ false

17) The primary market includes the sale of securities by way of initial public offerings.⊚ true ⊚ false

18) The most common partnership arrangement carries limited liability to the partners.⊚ true ⊚ false

19) A limited partnership limits the profits partners may receive.⊚ true ⊚ false 3 / 4

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20) In terms of size of revenues and profits, the corporation is by far the most important form of business organization in Canada.⊚ true ⊚ false

21) Dividends paid to corporate shareholders have already been taxed once as corporate income.⊚ true ⊚ false

22) One advantage of the corporate form of organization is that income received by shareholders is not taxable since the corporation already paid taxes on the income distributed.⊚ true ⊚ false

23) A corporation must have at least 35 shareholders.⊚ true ⊚ false

24) Profits of a manufacturing corporation are taxed at the same rate as dividends.⊚ true ⊚ false

25) Recently, the emphasis of financial management has been on the relationships between risk and return.⊚ true ⊚ false

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