Finance Exam 1

What three questions are the financial manager concerned with?

Capital budgeting, working capital management, capital structure

Which corporate officer is responsible for accurate financial accounting of the firm's activities?

Controller

Which of the following is NOT one of the basic areas of finance?

Personal finance

Which of the following are defining features of the primary market?

Proceeds from the sale of securities goes to the issuing firm It is the market where initial public offerings are made

What is the main goal of the financial management?

To maximize current share value

Which corporate officer is responsible for managing the firm's cash?

Treasurer

Which of the following positions generally report to the chief financial officer (CFO)?

Treasurer, and controller

True or false: In a large corporation, stockholders and manager are usually separate groups

True

A corporation is a distinct _________ entity and as such can have a name and take advantages of the legal powers of

legal

A _____________ is similar to proprietorship, except that there are two or more owners.

partnership

The relationship between stockholders and management can best be described as a(n) __________ relationship.

agency

The conflict on interest between an agent and principal is called a(n).

Agency problem

A general partnership has which of the following characteristics?

All partner share in gains or losses of the partnership. Each owner has unlimited liability for all firm debts.

A corporation receives cash from financial markets by selling ________ and __________.

Bonds and stocks

____________ budgeting is process of planning and managing a firm's long-term assets.

Capital

Which of the following are included in a firm's capital structure?

Equity and Long-term debt

One of the important questions in the area of investments includes the potential risks and reward associated with investing in _________ assets.

Financial

How is ownership transferred in a corporation?

Ownership is transferred by gifting or selling shares of stock.

Business finance is broadly concerned with which of the following (select all that apply)?

How to manage day-to-day finances of the firm. Which long-term investment to make How to finance long-term investments

A good financial decision will do which of the following?

Increase market value and increase the value of the firm's existing stock

Working capital includes which of the following?

Inventory, cash, short-term assets

Since ________ and ownership are seperated, a corporation's life is unlimited.

Management

In large firms, financial activity is usually associated with which

Chief financial officer