What are the three basic questions addressed by the study of investments?

1) Which of the following statements best represents what finance is about?

A) How political, social, and economic forces affect corporations

B) Maximizing profits

C) The study of how people and businesses make investment decisions and how to finance those decisions

D) Reducing risk

2) From a financial point of view, a company that decides to develop new product is making

A) a financing decision.

B) an investment decision.

C) a capital structure decision.

D) a cash flow decision.

3) Working capital management refers to

A) long-term financing decisions.

B) the management of cash flows.

C) investing in product development.

D) capital structure.

4) Finance managers need to interact constantly with

A) marketing managers.

B) accounting staff.

C) management information systems staff.

D) all of the above.

5) The personal decision to obtain a college degree in business is primarily a(n) ________ decision.

A) social 

B) investment

C) ethical

D) financing

6) The area of finance that deals with long-term investment decisions is known as

A) capital structure.

B) working capital management.

C) financial strategy.

D) capital budgeting.

7) Capital structure refers to the financing of long-term investments.

Answer:  TRUE

8) Business financial decisions are fundamentally different from personal financial decisions.

Answer:  FALSE

9) What are the three basic questions addressed by the study of investments?

Answer: 

1.  What investments should the firm undertake?

2.  How should the firm fund these investments?

3.  How can the firm best manage cash flows in its day-to-day operations?