FIN 111 Actual Exam Questions And Correct Detailed Answers.
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Course
FIN.
Institution
FIN.
Wealth - correct answer the economic value of the assets someone possess
Stakeholder - correct answer anyone other than an owner (shareholder) with a claim on the cash flows of a company, including employees, suppliers, cr...
FIN 111
Wealth - correct answer the economic value of the assets someone possess
Stakeholder - correct answer anyone other than an owner (shareholder) with a
claim on the cash flows of a company, including employees, suppliers, creditors, and the government
Productive assets - correct answer the tangible and intangible assets a company
uses to generate cash flows
Residual cash flows - correct answer the cash remaining after a company has paid
operating expenses and what it owes creditors and in taxes; can be paid to the owners as a cash
dividend or reinvested in the business
Insolvency - correct answer the inability to pay debts when they're due
How the financial manager's decision affect the balance sheet - correct answer
Financial managers are concerned with three fundamental types of decisions: capital budgeting
decisions, financings decisions and working capital management decisions. Each type of decision has a
direct and important effect on the company's balance sheet - in other words, on the company's
profitability
Working capital management decisions - correct answer deals with day -to-day
financial matters and affect current assets, current liabilities, and net working capital
Capital budgeting decisions - correct answer determines what long-term productive
assets the company will purchase
Financing decisions - correct answer determines the company's capital structure
, Capital structure - correct answer the mix of debt and equity that is used to finance
a company
Capital markets - correct answer financial markets where equity and debt
instruments with maturities greater than 1 year are traded
Net working capital - correct answer the dollar difference between current assets
and current liabilities
Sole trader - correct answer a business owned by a single individual
Partnership - correct answer two or more owners who have joined together legally
to manage a business and share in it's profits
Limited liability - correct answer the legal liability of a limited partner or
shareholder in a business, which extends only to the capital contributed or the amount invested
Company - correct answer an independent legal entity able to do business in its
own right; in a legal sense, it is a 'person' distinct from it's owners
Public company - correct answer a company that lists on a stock exchange, such as
the ASX, in which large amounts of debt and equity are publicly traded
Principal - agent problem - correct answer the scope for conflict or division between
principals (owners) and agents (managers) over the goals of the firm that are being pursued by its policy
and management decisions
Agency conflicts - correct answer conflicts of interest between a principal and an
agent
Agency costs - correct answer the costs arising from conflicts of interest between a
principal and an agent; for example, between a company's owners and its management
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