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ABA CTFA Practice Test - Questions Answers, Page 22

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Saving for vacation next summer or paying off small debts are examples of ?

A.
opportunity planning
A.
opportunity planning
Answers
B.
short-term goals
B.
short-term goals
Answers
C.
long-term goals
C.
long-term goals
Answers
D.
opportunity results
D.
opportunity results
Answers
Suggested answer: B

Spending, saving and investing to have the kind of life you want and financial security can be achieved by?

A.
Personal financial planning
A.
Personal financial planning
Answers
B.
Paying interest
B.
Paying interest
Answers
C.
Discussing your financial situation with a friend
C.
Discussing your financial situation with a friend
Answers
D.
Regulating inflation
D.
Regulating inflation
Answers
Suggested answer: A

__________ is concerned with the acquisition, financing, and management of assets with some overall goal in mind.

A.
Financial management
A.
Financial management
Answers
B.
Profit maximization
B.
Profit maximization
Answers
C.
Agency theory
C.
Agency theory
Answers
D.
Social responsibility
D.
Social responsibility
Answers
Suggested answer: A

Jensen and Meckling showed that __________ can assure themselves that the __________ will make optimal decisions only if appropriate incentives are given and only if the __________ are monitored.

A.
Principals; agents; agents
A.
Principals; agents; agents
Answers
B.
Agents; principals; principals
B.
Agents; principals; principals
Answers
C.
Principals; agents; principals
C.
Principals; agents; principals
Answers
D.
Agents; principals; agents
D.
Agents; principals; agents
Answers
Suggested answer: A

Which of the following statements is not correct regarding earnings per share (EPS) maximization as the primary goal of the firm?

A.
EPS maximization ignores the firm's risk level
A.
EPS maximization ignores the firm's risk level
Answers
B.
EPS maximization does not specify the timing or duration of expected EPS
B.
EPS maximization does not specify the timing or duration of expected EPS
Answers
C.
EPS maximization naturally requires all earnings to be retained
C.
EPS maximization naturally requires all earnings to be retained
Answers
D.
EPS maximization is concerned with maximizing net income
D.
EPS maximization is concerned with maximizing net income
Answers
Suggested answer: D

Which of the following is not a perquisite (perk)?

A.
Company-provided automobile
A.
Company-provided automobile
Answers
B.
Expensive office
B.
Expensive office
Answers
C.
Salary
C.
Salary
Answers
D.
Country club membership
D.
Country club membership
Answers
Suggested answer: C

What is the most important of the three financial management decisions?

A.
Asset management decision
A.
Asset management decision
Answers
B.
Financing decision
B.
Financing decision
Answers
C.
Investment decision
C.
Investment decision
Answers
D.
Accounting decision
D.
Accounting decision
Answers
Suggested answer: C

How are earnings per share calculated?

A.
Use the income statement to determine earnings after taxes (net income) and divide by the previous period's earnings after taxes. Then subtract 1 from the previously calculated value
A.
Use the income statement to determine earnings after taxes (net income) and divide by the previous period's earnings after taxes. Then subtract 1 from the previously calculated value
Answers
B.
Use the income statement to determine earnings after taxes (net income) and divide by the number of common shares outstanding
B.
Use the income statement to determine earnings after taxes (net income) and divide by the number of common shares outstanding
Answers
C.
Use the income statement to determine earnings after taxes (net income) and divide by the number of common and preferred shares outstanding
C.
Use the income statement to determine earnings after taxes (net income) and divide by the number of common and preferred shares outstanding
Answers
D.
Use the income statement to determine earnings after taxes (net income) and divide by the forecasted period's earnings after taxes. Then subtract 1 from the previously calculated value
D.
Use the income statement to determine earnings after taxes (net income) and divide by the forecasted period's earnings after taxes. Then subtract 1 from the previously calculated value
Answers
Suggested answer: B

The __________ decision involves a determination of the total amount of assets needed, the composition of the assets, and whether any assets need to be reduced, eliminated, or replaced.

A.
asset management
A.
asset management
Answers
B.
Financing
B.
Financing
Answers
C.
Investment
C.
Investment
Answers
D.
Accounting
D.
Accounting
Answers
Suggested answer: C

You need to understand financial management even if you have no intention of becoming a financial manager. One reason is that the successful manager of the not-too-distant future will need to be much more of a __________ who has the knowledge and ability to move not just vertically within an organization but horizontally as well. Developing __________ will be the rule, not the exception.

A.
Specialist; specialties
A.
Specialist; specialties
Answers
B.
Generalist; general business skills
B.
Generalist; general business skills
Answers
C.
Technician; quantitative skills
C.
Technician; quantitative skills
Answers
D.
Team player; cross-functional capabilities
D.
Team player; cross-functional capabilities
Answers
Suggested answer: D
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