Fin 301 Chapter 1 Exam Questions with Correct Answers
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Course
FIN301
Institution
FIN301
What is finance - Answer-the study of how and under what terms funds are allocated between those with excess funds and those who need funds.
Primary Areas of Finance: - Answer-1. corporate finance
2. investments and valuation
3. capital markets and financial institution
Primary Areas of Fi...
Fin 301 Chapter 1 Exam Questions with
Correct Answers
What is finance - Answer-the study of how and under what terms funds are allocated
between those with excess funds and those who need funds.
Primary Areas of Finance: - Answer-1. corporate finance
2. investments and valuation
3. capital markets and financial institution
Primary Areas of Finance: Corporate Finance (or Business Finance, or Financial
Management) - Answer-how companies raise and invest money and manage their
financial resources
Primary Areas of Finance: Investments and valuation - Answer-focuses on valuation
techniques and how to value alternative investment opportunities that are provided
primarily through financial markets and institutions
Primary Areas of Finance: Financial Institution and capital markets - Answer-examines
the structure of capital markets, the role of financial institutions, the process of financial
intermediation, and how money flows in the economy
three most basic types of financial decisions managers must make? - Answer-1. What
long-term investments should be undertaken. (capital budgeting decisions)
2. Where will you get the long-term financing to invest. (Financing decisions)
3.How to manage day-to-day financial matter. (Working capital management decisions)
what is working capital - Answer-financial markets where issuers and investors buy and
sell debt and equity securities
Debt - Answer-represents an obligation to repay borrowed moneys
Stock - Answer-ownership in a company
Investment decision - Answer-how corporate managers should allocate funds of the
company to buy or build projects and investments that will be worth more than they cost
financing decision - Answer-how corparate managers should raise money from
institutional and individual investors through the sale of debt and equity claims for the
company to finance the investment projects on the firm
dividend decision - Answer-the percentage of the company's profits and cash from
operations that the company should reinvest in the business and how much should be
returned to the company's shareholders in the form of dividends
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