Question

I. True or False (10 points, 1 point each) No Answer 1. The primary goal of any company should be to maximize current period profit. 2. Previously issued securities are traded among investors in the secondary markets 3. The income statement resembles a snapshot of the firm at a specific time. 4. Pfizer's spending of $7.6 billion in 2006 on research and development of new drugs is a financing decision. 5. Specific risks are generally associated with a single firm or industry 6. For a given amount, the lower the discount rate, the less the present value. 7. Shareholders welcome higher short-term profits even when they damage long-term profits. 8. A long-term investor would more likely be interested in a bond's current yield rather than its yield to maturity 9. A perpetuity is a special form of an annuity. 10. The asset turnover ratio and inventory turnover ratio are both

Answer 1

1. The primary goal of the company should be to maximize current period profits - False

2. Previously issued securities are traded among investors in the secondary markets - True

3. The income statement resembles a snapshot of the firm at a specific time - False

4.Pfizer's spending of $7.6 billion in 2006 on research and development of new drugs is a financing decision - False

5. Specific risks are generally associated with a single firm or industry - True

6. For a given amount, the lower the discount rate, the less the present value - False

7. shareholders welcome higher short-term profits even when they damage long-term profits - False

8. A long-term investor would more likely be interested in a bond's current yield rather than its yield to maturity.-False

9. A perpetuity is a special form of an annuity - True

10. The asset turnover ratio and inventory turnover ratio are both efficiency ratios - True