for review.
Corporate Finance Practice Sheet
Question 1
What is the main purpose of corporate finance?
A. To make money
B. To manage risk
C. To maximize shareholder value
D. To manage assets
Answer: C. To maximize shareholder value
Question 2
What is the difference between equity and debt financing?
A. Equity financing is debt-based while debt financing is equity-based.
B. Equity financing is equity-based while debt financing is debt-based.
C. Equity financing is riskier while debt financing is safer.
D. Equity financing is used to buy assets while debt financing is used to purchase liabilities.
Answer: B. Equity financing is equity-based while debt financing is debt-based.
Question 3
What is the main goal of financial management?
A. To increase profits
B. To reduce costs
C. To maximize shareholder wealth
D. To minimize risk
Answer: C. To maximize shareholder wealth
Question 4
What is the difference between financial and managerial accounting?
A. Financial accounting focuses on the past while managerial accounting focuses on the future.
B. Financial accounting focuses on internal decisions while managerial accounting focuses on external decisions.
C. Financial accounting focuses on the present while managerial accounting focuses on the past.
D. Financial accounting focuses on external decisions while managerial accounting focuses on internal decisions.
Answer: D. Financial accounting focuses on external decisions while managerial accounting focuses on internal decisions.
Question 5
What is the primary role of a financial manager?
A. To make investment decisions
B. To analyze financial statements
C. To manage financial resources
D. To develop financial strategies
Answer: C. To manage financial resources
Answer Key
Question 1: C. To maximize shareholder value
Question 2: B. Equity financing is equity-based while debt financing is debt-based.
Question 3: C. To maximize shareholder wealth
Question 4: D. Financial accounting focuses on external decisions while managerial accounting focuses on internal decisions.
Question 5: C. To manage financial resources