What is Finance? correct answers The study of how money is managed and the actual process of acquiring needed funds
What are the major areas of finance? correct answers Financial Management
Capital Market
Investment (Stocks & Bonds)
What are the three forms of business organization? correct...
FINC 200 Exam 1 || All Answers Are Correct 100%.
What is Finance? correct answers The study of how money is managed and the actual process of
acquiring needed funds
What are the major areas of finance? correct answers Financial Management
Capital Market
Investment (Stocks & Bonds)
What are the three forms of business organization? correct answers Proprietorship
Partnership
Corporation
What are advantages of proprietorships and partnerships? correct answers Ease of formation
Subject to few regulations
No corporate income taxes
What are disadvantages to proprietorships and partnerships? correct answers Difficult to raise
capital
Unlimited liability
Limited life
What are advantages to corporations? correct answers Unlimited life
Easy transfer of ownership
Limited liability
Ease of raising capital
What are disadvantages to corporations? correct answers Double taxation
Cost off setup and report filing
What is the primary financial goal of management? correct answers shareholder wealth
maximization, which translates to maximizing stock price.
What is the value of any asset equal too? correct answers Present value of cash flows stream to
owners.
Most significant decisions are evaluated in terms of what? correct answers financial
consequences
Stock prices change over time as what changes? correct answers Conditions change and as
investors obtain new information about a company's prospects
Managers recognize that being socially responsible is not inconsistent with what? correct
answers maximizing shareholder value
In equilibrium, a stocks price should equal what? correct answers its "true" or intrinsic value
, What kind of concept is an intrinsic value? correct answers Long-run
To the extent that investor perceptions are incorrect, a stock's prices in the short run may what?
correct answers deviate from its intrinsic value
Ideally, what should managers avoid? correct answers Actions that reduce intrinsic value,e even
if those decisions increase the stock price in the short run
Has globalization of business increased or decreased? correct answers increased
Stockholders now have more control of what? correct answers Corporate governance
What is automation? correct answers Using robots in businesss
The effects of ever-improving information technology have had what effect on business? correct
answers A profound effect on all aspects of business finance
What factors affect managerial behavior? correct answers Managerial compensation packages
Direct intervention by shareholders
The threat of firing
The threat of takeover
Managers are naturally includes to act in whose interests? correct answers Their own (which are
not always the same interests as stockholders)
Why are stockholders are more likely to prefer riskier projects? correct answers They receive
more of the upside if the project succeeds.
What are bondholders receiving fixed payments more interested in? correct answers limiting debt
What are bondholders particularly concerned about? correct answers the use of additional debt
How do bondholders attempt to protect themselves? correct answers by including covenants in
bond agreements that limit the use of additional debt and constrain managers' actions
In a well-functioning economy, capital flows efficiently from who? correct answers those who
supply capital to those who demand it
Who are the suppliers of capital? correct answers Individuals and institutions with "excess funds"
Suppliers of capital are groups who are what? correct answers saving money and looking for a
rate of return on their investment
Who are demanders or users of capital? correct answers Individuals and institutions who need to
raise funds to finance their investment opportunities.
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