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FINC 300 Midterm Exam Questions And Answers Latest Update $15.49   Add to cart

Exam (elaborations)

FINC 300 Midterm Exam Questions And Answers Latest Update

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FINC 300 Midterm Exam Questions And Answers Latest Update

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  • October 24, 2024
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  • 2024/2025
  • Exam (elaborations)
  • Questions & answers
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Solution 2024/2025
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FINC 300 Midterm Exam Questions And
Answers Latest Update

financial management ANS✔✔ maintenance and creation of economic value
or wealth by focusing on decision making with eye toward creating wealth



fundamental goal of business ANS✔✔ create value for shareholders by
maximization of shareholder wealth



shareholders ANS✔✔ legal owners of the firm



5 principles that form the foundations of finance ANS✔✔ 1) cash flow is
what matters

2) money has a time value

3) risk requires a reward

4) market prices are generally right

5) conflicts of interest cause agency problems



cash flow is what matters ANS✔✔ -represents money that can be spent

-determine value of business

-incremental cash flow



money has a time value ANS✔✔ opportunity cost

, Solution 2024/2025
Pepper
opportunity cost ANS✔✔ cost of making a choice in terms of the next best
alternative that must be foregone



risk requires a reward ANS✔✔ return must satisfy 2 requirements:

1) a return for delaying consumption

2) an additional return for taking on a risk



market prices are generally right ANS✔✔ efficient market



conflicts of interests cause agency problems ANS✔✔ -what is best for
managers vs what is best for stockholders

-agency problem



agency problem ANS✔✔ problems and conflicts resulting from the
separation of the management and ownership of the firm

-root of the problem is conflict of interests



finance ANS✔✔ the study of how people and businesses evaluate
investments and raise capital to fund them



3 issues finance addresses ANS✔✔ 1) capital budgeting

2) capital structure decisions

3) working capital management



working capital management ANS✔✔ management of firms current assets
and short term financing

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