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
