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Test Bank for Principles of Managerial Finance 13th Edition Gitman Multiple Choice Questio, Exams of Financial Management

University of Northwestern Ohio (UNOH)Financial Management

Test Bank for Principles of Managerial Finance 13th Edition Gitman Multiple Choice Questions 2025

Typology: Exams

2024/2025

Available from 06/20/2025

bonny-kahuro 🇺🇸

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56 Free Test Bank for Principles of

Managerial Finance 13th Edition Gitman

Multiple Choice Questions

Which of the following serve as intermediaries channeling the savings of individuals, businesses and

governments into loans and investments?

•

A) Financial Institutions

•

B) Financial Markets

•

C) Securities Exchanges

•

D) OTC market

Trading is carried out in the Over-the-Counter (OTC) Exchange by

•

A) the competitive bid process.

•

B) the competitive bid process and the negotiation process.

•

C) the auction process.

•

D) an investment banker.

Which of the following is NOT a financial institution?

•

A) A commercial bank.

•

B) An insurance company.

•

C) A pension fund.

•

D) A newspaper publisher.

Partial preview of the text

Download Test Bank for Principles of Managerial Finance 13th Edition Gitman Multiple Choice Questio and more Exams Financial Management in PDF only on Docsity!

56 Free Test Bank for Principles of

Managerial Finance 13th Edition Gitman

Multiple Choice Questions

Which of the following serve as intermediaries channeling the savings of individuals, businesses and governments into loans and investments?

A) Financial Institutions
B) Financial Markets
C) Securities Exchanges
D) OTC market Trading is carried out in the Over-the-Counter (OTC) Exchange by
A) the competitive bid process.
B) the competitive bid process and the negotiation process.
C) the auction process.
D) an investment banker. Which of the following is NOT a financial institution?
A) A commercial bank.
B) An insurance company.
C) A pension fund.
D) A newspaper publisher.

Trading is carried out on the floor of the New York Stock Exchange by

A) the negotiation process.
B) the auction process.
C) a telecommunications network.
D) investment bankers. Which of the following assist companies in raising capital, advise firms on major transactions such as mergers or financial restructuring, and engage in trading and market making activities?
A) Investment Banks
B) Securities Exchanges
C) Mutual Funds
D) Commercial Banks The stock exchange is a primary market where new public issues are sold.
A) regional
B) American
C) New York
D) over-the-counter Firms that require funds from external sources can obtain them from

B) is a net demander of funds.
C) borrows funds directly from financial institutions.
D) maintains permanent deposits with financial institutions. The Glass-Steagall Act
A) allowed commercial and investment banks to engage in the same activities.
B) created the Securities Exchange Commission.
C) created the Federal Deposit Insurance program and separated the activities of commercial and investment banks.
D) was intended to regulate the activities in the primary market. The nonexclusive sale of either bonds or stocks to the general public is called
A) private placement.
B) public offering.
C) organized selling.
D) none of the above. All of the following are examples of organized stock exchanges EXCEPT
A) the New York Stock Exchange.
B) the American Stock Exchange.
C) the Pacific Stock Exchange.

D) the over-the-counter exchange. Securities exchanges create efficient markets that do all of the following EXCEPT
A) ensure a market in which the price reflects the true value of the security.
B) allocate funds to the most productive uses.
C) control the supply and demand for securities through price.
D) allow the price to be determined by supply and demand of securities. The is created by a financial relationship between suppliers and demanders of short-term funds.
A) stock market
B) capital market
C) financial market
D) money market The sale of a new security directly to an investor or a group of investors is called
A) the secondary market
B) the primary market
C) the capital market
D) the private placement market Most money market transactions are made in

B) users; providers
C) suppliers; demanders
D) purchasers; sellers A competitive market that allocates funds to their most productive use is called a(n)
A) liquid market.
B) middleman's market.
C) efficient market.
D) investor's market. Most businesses raise money by selling their securities in a
A) public offering.
B) private placement.
C) direct placement.
D) stock exchange. Which of the following provide savers with a secure place to invest funds and offer both individuals and companies loans to finance investments?
A) Investment Banks
B) Securities Exchanges
C) Mutual Funds

D) Commercial Banks All of the following are functions of security exchanges EXCEPT
A) allocating scarce capital.
B) aiding in new financing.
C) creating continuous markets.
D) holding demand deposits. The market is where securities are initially issued and the market is where pre- owned securities (not new issues) are traded.
A) primary; secondary
B) money; capital
C) secondary; primary
D) primary; money The major securities traded in the capital markets are
A) commercial paper and Treasury bills.
B) Treasury bills and certificates of deposit.
C) stocks and bonds.
D) bonds and commercial paper. Firms that require funds from external sources can obtain them in one of the following ways EXCEPT

C) guarantees individuals will not lose any money held at any type of financial institution that fails.
D) guarantees individuals will not lose any money, up to a specified amount, held at any type of financial institution that fails. All of the following are true about mortgage-backed securities EXCEPT
A) They represent claims on the cash flows generated by a pool of mortgages.
B) All of the cash flows from these securities are guaranteed by the U.S. government.
C) They can be purchased by individual investors, pension funds, and mutual funds.
D) The primary risk associated with them is that homeowners may not be able or may not choose to repay the loan. All of the following are true EXCEPT
A) Interest income received by a corporation is taxed as ordinary income.
B) Corporations pay taxes on all dividends received from other corporations, no matter their share of ownership.
C) Corporations may pay taxes on only 30 percent of the dividends received from other corporations, depending on their percentage of ownership.
D) Capital gains is taxed as ordinary income. I f a corporation sells certain capital equipment for more than their initial purchase price, the difference between the sale price and the purchase price is called a(n)
A) ordinary gain.
B) capital loss.

C) capital gain.
D) ordinary loss. In efficient market is one where
A) prices of stocks move up and down widely without apparent reason.
B) prices of stocks remain steady for long periods of time.
C) prices of stocks are unaffected by market news.
D) prices of stocks incorporate new information quickly and adjust appropriately to their true value. The primary risk of mortgage-backed securities is
A) that the prices of housing will go down.
B) that the prices of housing will increase.
C) that the government will not be able to meet the guarantees on the cash flows.
D) that homeowners may not be able to, or choose not to, repay their loans. An implication of the Efficient Market Hypothesis is that it is very hard for an actively managed mutual fund to earn above average returns. This is true for all of the following reasons EXCEPT
A) new information is predictable and therefore already incorporated into the stock prices.
B) new information is by definition unpredictable, thus hard to incorporate into stock prices.
C) actively managed mutual funds typically charge fees of about 1 .5%.
D) index funds make no attempt to analyze stocks.

In a market, the buyer and seller are brought together to trade securities in an organization called.

A) dealer; securities market
B) broker; over-the - counter market
C) broker; securities market
D) dealer; over-the-counter market The Gramm-Leach-Biley Act
A) does not allows business combinations between commercial banks, investment banks and insurance companies.
B) allows business combinations between commercial banks and investment banks, but not insurance companies.
C) allows business combinations between commercial banks, investment banks and insurance companies.
D) was signed during the Great Depression because of the financial crisis. The dividend exclusion for corporations receiving dividends from another corporation has resulted in
A) a lower cost of equity for the corporation paying the dividend.
B) a higher relative cost of bond-financing for the corporation paying the dividend.
C) stock investments being relatively less attractive, relative to bond investments made by one corporation in another corporation.
D) stock investments being relatively more attractive relative to bond investments made by one corporation in another corporation.

In general, most corporate capital gains are taxed at tax rate.

A) a 46 percent
B) the ordinary
C) a 28 percent
D) a 30 percent In an efficient market if a company announced sales of a new product are lower than expected, what would you expect to happen to the stock price?
A) It would not change.
B) It would increase.
C) I t would decrease.
D) I t would move it the same direction as the market in general. Jennings, Inc. has a tax liability of $170,000 on pretax income of $500,000. What is the average tax rate for Jennings, Inc.?
A) 34 percent
B) 46 percent
C) 25 percent
D) 40 percent

B) contract; slows down
C) increase; increases
D) contract; increases Corporation A owns 15 percent of the stock of corporation B. Corporation B pays corporation A $100, in dividends in 2002. Corporation A must pay tax on
A) $100,000 of ordinary income.
B) $ 30,000 of ordinary income.
C) $ 70,000 of ordinary income.
D) $ 70,000 of capital gain. The tax deductibility of various expenses such as general and administrative expenses their after-tax cost.
A) increases
B) reduces
C) has no effect on
D) has an undetermined effect on The average tax rate of a corporation with ordinary income of $105,000 and a tax liability of $24,200 is

A) 46 percent.
B) 23 percent.
C) 34 percent.
D) 15 percent. Congress allows corporations to exclude from taxes 70 to 100 percent of dividends received from other corporations. Congress did this to
A) encourage corporations to invest in each other.
B) avoid double taxation on dividends.
C) eliminates most of the potential tax liability from the dividends received by the second and any subsequent corporations.
D) lower the cost of equity financing for corporations. Which of the follow regulates the secondary market and created the Securities Exchange Commission (SEC)?
A) The Securities Act of 1933
B) The Gramm-Leach-Biley Act
C) The Securities Exchange Act of 1934
D) The Glass--Steagall Act Which of the follow regulates the primary market in which securities are originally issued to the public?
A) The Securities Act of 1933

D) a higher percentage of owner home equity.

Test Bank for Principles of Managerial Finance 13th Edition Gitman Multiple Choice Questio, Exams of Financial Management

Related documents

Partial preview of the text

Download Test Bank for Principles of Managerial Finance 13th Edition Gitman Multiple Choice Questio and more Exams Financial Management in PDF only on Docsity!

56 Free Test Bank for Principles of

Managerial Finance 13th Edition Gitman

Multiple Choice Questions