5th Tutorial: Midterm 1 Revision

1. A shareholder is:
A. any person who has voting rights and receive dividends based on stock ownership of
a corporation.
B. a person who initially founded a firm and currently has management control over that
firm.
C. a creditor to whom a firm currently owes money.
D. none of the above.
Answer: A

2. Decisions made by financial managers should primarily focus on

increasing which one of the following?
A. size of the firm
B. growth rate of the firm
C. market value per share of outstanding stock
D. total sales
Answer: C

3. Which of the following are not a financial intermediary?

A. Insurance companies
B. Banks
C. Brokers
D. Government
Answer: D

4. Which of the following represent cash outflows from a corporation?

I. issuance of securities
II. payment of dividends
III. Net profits
IV. payment of salaries/wages
A. II and IV only
B. I and IV only
C. I, II, and IV only
D. II, III, and IV only
Answer: A

5. Institutions such as banks that collect funds from savers that can be
loaned to borrowers are known as
A. Financial Intermediaries
B. Financial Assets
C. Dividends
D. Credit Unions
Answer: A
6. It accepts deposits from individuals and organizations that have excess
funds and provide loans to those who are in need. This financial institution
is called _______.
A. investment banks
B. commercial banks
C. credit unions
D. insurance companies
Answer: B

7. Asymmetric information can be divided into ______________________.

A. Money market and capital market
B. Adverse selection and moral hazard
C. Economies of scale and economies of scope
Answer: B

8. What is represent for A in the white circle?

A. Funds
B. Financial markets
C. Indirect finance
D. Financial intermediaries
Answer: D
9. What does COGS stand for?
A. cost of goals scored
B. cost of goods stocked
C. cost of goods sold
D. cost of goods solvent
Answer: C

10. Financial ratios that tell how well a company can pay off its short-term
debts and meet unexpected needs for cash.
A. liquidity ratios
B. efficiency ratios
C. leverage ratios
D. profitability ratios
Answer: A

11. Financial ratios that tell how much of each dollar of sales, assets, and
owner's investments resulted in net profit.
A. liquidity ratios
B. efficiency ratios
C. profitability ratios
D. leverage ratios
Answer: C

12. What a company owes to creditors:

A. Assets
B. Liabilities
C. Equity
D. All of the above
Answer: B