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