421. Which of these activities does not exclusively come within the scope of corporate financial decision-making?
A. How much should be invested?
B. How much is to be allocated to the marketing budget?
C. Which type of finance should be chosen?
D. How much finance should be raised?

422. A great deal of financial theory is based on the concept of free markets and in particular the theory of:
A. perfect competition.
B. monopolistic competition.
C. monopoly.
D. oligopoly.

423. Asymmetric information occurs because:
A. one party to a financial transaction has more information than another.
B. stock market prices on the internet lag real time prices by up to fifteen minutes.
C. not all investors understand company accounts and balance sheets.
D. not all shareholders are able to attend company annual general meetings.

424. Which of the following is not a fundamental concept in Corporate Finance?
A. Net present value.
B. The relationship between risk and return.
C. The business cycle.
D. Double-entry book-keeping.

425. Which of the following is a legitimate reason why firm value maximization is preferred to profit maximization as the ideal goal for the firm?
A. Value takes account of both profit and cash flow.
B. Value or discounted cash flow is less ambiguous than profit.
C. Value takes account of depreciation.
D. Profit is too concerned with the longer term.

426. What does the general principle of disclosure and transparency mean?
A. The company is obliged to reveal all holding companies, strategic alliances, and joint ventures to the government.
B. The company is obliged to reveal all investment plans to employees.
C. The company is obliged to reveal all information in a timely manner which could have a significant effect on shareholder welfare.
D. The company is obliged to lodge audited accounts with Companies House.

427. Which of the following people or institutions is not the author of a corporate governance code?
A. International Corporate Governance Network.
B. Cadbury.
C. OECD.
D. Harvard-Yale.

428. What is the stakeholder view of the firm?
A. Shareholders should eventually be returned their stake in the firm.
B. The firm must honour its wider social obligations as well as making money.
C. The only obligation on the firm is to maximize profit.
D. The firm exists to maximize return.

429. Why did the credit crunch occur?
A. Because of low levels of credit and interest.
B. Because of an unwillingness to securitize the cash flows from financial assets.
C. Because of lower-than-expected default rates on US mortgages.
D. Because of bank overexposure to CDOs and CDS.

430. What is the Grameen bank?
A. A US investment bank dealing in CDOs.
B. A Bangladeshi bank specializing in microfinance.
C. A Japanese bank specializing in Forex trading.
D. A British hedge fund.

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