SB FIN 1

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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


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