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1. Multiple Choice: What is the primary goal of financial management? a) Risk maximization b) Sales maximization c) Shareholder wealth maximization d) Customer Answer: c) Shareholder wealth maximization Rationale: The primary goal is to maximize shareholder wealth, as it reflects the overall value of the company. 2. True/False: The Modigliani-Miller theorem suggests that, in the absence of taxes, the value of a leveraged firm is equal to the value of an unleveraged firm. Answer: True Rationale: The theorem states that under certain conditions, the value of a company is unaffected by how it is financed. 3. Fill-in-the-blank: The _________
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