SB FIN 1
A ______ is someone other than an owner or a creditor who potentially has a claim of the cash flows of a firm. - shareholder - mortgage holder - bondholder - stakeholder
stakeholder
The financial manager acts in the shareholders' best interests by making decisions that increase the value of _____.
stock
The goal of the for-profit business is to maximize _________ equity.
stockholders
The relationship between stockholders and management can best be described as a(n) ______ relationship.
agency
A partnership must have at least _______ owners.
two
When a corporation is formed, it is granted which of the following rights?
* Legal powers to sue * State citizenship for jurisdictional purposes * The ability to issue stock
The five main areas of finance are
- corp fin - investment (assets like stocks and bonds) - fin institution (banks or insurance) - international fin - fintech
A ______ is someone other than an owner or a creditor who potentially has a claim of the cash flows of a firm.
- employees - customers - supplier - govt
Which of the following companies were involved in corporate scandals that led to Sarbanes-Oxley? - eron - worldcom - tyco - disney
- enron - worldcom - tyco
A corporation by another name
- joint stock companies - Public limited companies -limited liability
Corporations in other countries are often called: - autonomous entities - public limited companies - re-calibrated partnerships - Joint stock companies
- public limited companies - Joint stock companies
The possible goal of profit maximization: - avoids maximizing the sales. - would probably be the most commonly cited goal for a business. - should always be a short-term goal. - can be achieved by cost-cutting.
- would probably be the most commonly cited goal for a business. - can be achieved by cost-cutting.
What are the most important questions to ask when starting a business
1. What long-term investment should be made 2. Where will long-term fin be obtained to pay for investments 3. how will everyday fin act be handled
explain the organizational chart that highlights the fin activity
Board of Directors I Chair of the board and chief executive officer (CEO) I President and chief operations officer (COO) I Vice pre. Marketing, Vice pre. Fin (CFO), Vice pre production I The vice pre of fin (CFO) I to treasure and controller
In large firms, financial activity is usually associated with which top officer?
Chief financial officer
Which of the following positions generally report to the chief financial officer (CFO)? - Director of marketing - Chief executive officer (CEO) - Controller - Treasurer
Controller and Treasurer
What are the two factors that impact whether managers will act in the best interest of stockholders?
How closely management goals align with stockholder goals and the way managers are compensated
What is the main goal of financial management?
To maximize current value per share of existing stock
______ budgeting is the process of making and managing expenditures on long-term assets.
capital
A corporation is a distinct ______ entity and as such can have a name and take advantage of the legal powers of natural persons.
legal
Capital budgeting is concerned with planning and managing a firm's _____.
long-term investments
Since ownership in a corporation can be dispersed over a huge number of stockholders, it can be argued that ______ effectively controls the firm.
management
In a shareholder-manager relationship, who is the agent?
manager
The goal of a for-profit business is to Blank______ existing owners' equity.
max
The goal of a for-profit business is to _____ existing owners' equity.
maximize
A sole proprietorship is a business owned by ______ person(s).
one
Most equity shares of large firms in the U.S. trade on:
organized auction markets
A business without separate legal authority formed by two or more people is known as a _____.
partnership
It is sometimes argued that, left to themselves, managers tend to minimize the amount of resources over which they have control. True or false?
False, they maximize
Which of the following are considered stakeholders in a company?
Government Employees Suppliers customers
Which of the following can be used to encourage managers to act in the best interests of shareholders?
Managerial compensation tied to performance Better prospects of promotion
The aim of the act known as Blank______ is to protect investors from corporate abuse. Multiple choice question.
SOX
In addition to the importance of finance for marketing, accounting, and management careers, finance is also now considered a ______ discipline, especially at the graduate level. - PLANT - STEM - GRET - MeGa
STEM
Which of the following, according to the textbook, are possible financial goals for a company?
Survival Maximize profits Minimize costs
A benefit corporation is for profit, and has the legal attributes of accountability, _____, and purpose. Multiple choice question.
accountability = refers to the fact that a benefit corporation must consider how an action will affect shareholders, employees, customers, the community, and the environment Transparency = corporate reports, a benefit corporation must provide an annual report detailing how the company pursued a public benefit Purpose = the idea that a benefit corporation must provide a public benefit, either to society as a whole or the env
If you hire a real estate company to sell your house, you are most apt to encounter which one of the following? - Securities Exchange Act of 1934 violation - Securities Act of 1933 violation - Capital structure problem - Agency problem
agency problem
It is argued that, left to themselves, managers would tend to maximize the amount of resources over which they have control or, more generally, ______ power or wealth.
corporate
Joint stock company is another name for what is referred to as a ____________ in the United States.
corporation or corporations
Some of the cash flow generated by a firm goes back to the financial markets in the form of ______.
dividends and debt payments
In financial markets, debt and _____ , securities are bought and sold.
equity
