Foundations of Finance

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Foundations of Finance, 7e (Keown/Martin/Petty) Chapter 1 An Introduction to the Foundations of Financial Management 1.1 Learning Objective 1 1) Financial management deals with the maintenance and ... creation of economic value or wealth. Answer: TRUE Keywords: Financial Management AACSB: Reflective thinking skills 2) Each financial decision made by a corporate manager can be evaluated by its direct impact on the corporation's stock price. Answer: FALSE Keywords: Goal of the Firm AACSB: Reflective thinking skills 3) The fundamental goal of a business is to maximize the retained earnings available to the corporation's shareholders. Answer: FALSE Keywords: Goal of the Firm AACSB: Reflective thinking skills 4) Shareholder wealth maximization means maximizing the price of the existing common stock. Answer: TRUE Keywords: Shareholder Wealth, Goal of the Firm AACSB: Reflective thinking skills 5) It is important to evaluate a corporate manager's financial decision by measuring the effect the decision should have on the corporation's stock price if everything else were held constant. Answer: TRUE Keywords: Goal of the firm, Shareholder Wealth Maximization AACSB: Reflective thinking skills [Show More]

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