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Business Administration
BUS 320
Amir Azaran

1) A firms financing and investment policy decisions cannot be made independently from one another. a) True b) False The correct answer is a. Feedback: P89, third paragraph on this page. 2) Which of the following is not a basic element of financial planning? a) Capital budgeting decision b) Financing policy c) Corporate structure decision d) Dividends and dividend policy e) Working capital management The correct answer is c. Feedback:p89, the first paragraph. 3) The most important result of the financial planning process is probably a) Showing the interactions between investing and financing decisions. b) Exploring different investment and financing options available to the firm, and the effects these options would have on market value of shareholders equity. c) Identifying different scenarios that could occur, thus avoiding unpleasant surprises as much as possible. d) Forcing managers to think about and prioritize amongst the firms goals. e) Communicating with investors and lenders. The correct answer is d. 4) A good financial planning model must make assumptions about which of the following variables? I. Asset requirements II. Cash surplus or shortfall III. Corporate tax rate IV. Economic conditions
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