Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Indicate whether the following statements are (True) or (False) and correct the false statements:
- Accounting is concerned with the process institutions, markets, and instruments involved in the transfer of money among and between individuals, businesses and government
- Financial services are concerned with the duties of the
financial manager . - The corporate controller is the officer responsible for the firm's financial activities such as financial planning and fund raising.
- Profit maximization is the main goal of a business organization. (True)
- The net accounting profit is the difference between the
cash inflows andcash outflows of a given project. - Financial markets are intermediaries that channel the savings of individual, businesses, and governments into loans or investments.
- Primary and secondary markets are markets for short-term and long-term securities, respectively.
- Public offering is the sale of a new security issue, typically bonds or
preferred stock , directly to an investor or group of investors. - When considering each financial decision alternative or possible action in terms of its impact on the share price of the firm's stock, financial managers should accept only those actions that are expected to increase the firm's profitability.
- The financial manager prepares financial statements that recognize revenue at the point of sale and expenses when incurred.
- Capital markets are for investors who want a safe temporary place to deposit funds where they can earn interest and for borrowers who have a short term need for funds.
- Common stock dividends paid to stockholders are equal to the earnings available for common stockholders divided by the number of shares of common stock outstanding.
- Time-series analysis is the evaluation of the firm's financial performance in comparison to other firm(s) at the same point in time.
- Marginal analysis means that projects must be implemented if their revenues are higher than their expenses.
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