Financial Management

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1. The financial markets allocate capital to corporations by
a)reflecting expectations of the market participants in the prices of the corporation's securities.
b)requiring higher returns from companies with lower risk than their competitors
c)rewarding companies with expected high returns with lower relative stock prices
d)relying on the opinion of investment bankers

2. The best indication of the operational efficiency of management is
a)net income.
b)earnings per share.
c)earnings before interest and taxes (EBIT).
d)gross profit.

3. The extent to which inventory financing may be used depends on
a)marketability of pledged goods.
b)price stability of goods.
c)perishability of goods.
d)all of the above

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