This section consists of NINE (9) multiple-choice questions. Each question is worth one (1) mark except for question 7 as it accounts for two (2) marks. Read the below case study and indicate which of the answer options provided is the correct answer.
Financial management is mainly concerned with:
Efficient management of every activity of business
Arrangement of funds required to the firm
Obtaining required funds in the appropriate mix and utilising them, efficiently
Profit maximization.
Financial decisions involve:
Investment, sales and dividend decisions
Finance, Working Capital and dividend decisions
Finance, Dividends and cash decisions
Working Capital, Finance and Capital budgeting.
Financial management helps in:
Short-term planning of company’s activities
Estimating the total funds’ requirement and their proper utilisation in fixed assets and working capital
Profit planning of the firm
Purchase new assets.
It is often that a conflict of interest between the corporate shareholders and the corporate managers may ensure as a result of conflicting decisions.
Which of the following terms describes the conflicting of decisions specified above?
corporate governance
agency problem
Transparency
legal liability.
Which of the following represent the major financial management decisions?
financing and investment
investment, financing, and asset management
financing and dividend
capital budgeting, cash management, and credit management.
Shareholder wealth in a firm is represented by:
the number of people employed in the firm.
The book value of the firm's assets is less than the book value of its liabilities.
The amount of salary paid to its employees.
the market price per share of the firm's common stock.
A would-be an example of a principal, while a would be an example of an agent.
Owner; board director
shareholder; owner
owner; manager
shareholder; bondholder.
A company's is (are) potentially the most effective instrument of good corporate governance.
Managers
auditors
board of directors
CEO.
The financial managers should primarily focus on the interests of .............
Shareholders.
Stakeholders.
Board of directors.
The vice president of finance.