FINANCE 3110 Chapter 1

FINANCE 3110 Chapter 1
The primary role of the firm is
shareholder wealth maximization
The shareholder wealth maximization goal states that the management should seek to
maximize the ______ of the expected future returns to the owners of the firm
present value
Financial managers can take a variety of actions to influence the market value of a
company's stock. All of the following are classifications of actions taken EXCEPT _____
decisions.
tax implications
Shareholder wealth is measured by the ____ value of the shareholders' common stock
holdings.
Market
The limitations of the profit maximization goal include which of the following?
a. It lacks a time dimension (i.e., it is static).
b. It fails to consider risk with alternative decisions.
c. The definition of profit is ambiguous.
d. all of the above
The objective of maximizing shareholder wealth, as measured by the market value of
the firm's stock, ____
provides a way to consider the risk of the benefits expected
The two most important disciplines on which financial management relies are
accounting and economics
Which of the following is NOT a professional certification for careers in the field of
finance
certified financial analyst (CFA)
When considering the risk of receiving cash flows, financial managers must be aware
that investors _____.
want higher returns for perceived greater risk
A major advantage of using the maximization of shareholder wealth as the primary goal
of the firm is that this goal considers _____.
the timing and the risk of the expected benefits to be received