FINA 3313 CH 1

agents

If the managers of a company are not the owners of the company

working capital management

One of the primary tasks of the financial manager is to manage short-term cash needs, which is known as:

Controller

Typically reports to the chief financial officer (CFO)?

A disadvantage of a partnership is __________.

Unlimited liability

An attractive takeover candidate.

When a firm has agency problems the stock price is often depressed which makes the firm:

What is one of the primary questions addressed by financial managers?

Which projects should the firm invest resources in to increase shareholder wealth?

The market price of a share of stock is determined by:

investors buying and selling the stock

limited liability company combines the:

limited liability of a corporation with the ownership of a partnership

One of the primary functions of the financial manager is

making financing decisions

Financial managers should undertake investment opportunities when the __________.

marginal benefit is greater than the marginal cost

The primary goal of the financial manager is to:

maximize shareholder wealth

When a manager makes a poor decision that is not in the shareholders' best interest it will be:

reflected in the stock price.

Financial managers __________ when making decisions because it can have a direct impact on shareholder wealth.

should always engage in ethical behavior

Capital structure

the mix of the firm's long-term sources of financing

Controller

A firm's chief accountant that is responsible for all accounting activities

Executive stock options

An example of an agency cost

Sarbanes-Oxley Act

The U.S. Congress passed legislation in 2002 that holds corporate managers personally responsible for the firm's financial disclosures and decisions.

foreign exchange manager

The manager responsible for monitoring and managing the firm's exposure to loss from currency fluctuations

capital budgeting

The process of evaluating long-term investment opportunities for the firm, and then determining which ones the firm should invest in.

Finance

The science and art of managing money

corporate governance

The set of rules, processes and laws that dictate how a firm is controlled, operated and regulated

corporation

a form of business organization that is considered an artificial being and has limited liability.

One of the most fundamental principles in the field of finance is that money has

a time value

Financial managers are more concerned with a firm's __________ than a firm's earnings per share when evaluating a potential acquisition.

cash flows

One of the basic premises in finance is that when the risk of an investment is high, the rate of return required by the investor will be:

high