Finance example #34843

18 April 2024
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31 test answers

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This subarea of finance looks at firm decisions in acquiring and utilizing cash received from investors or from retained earnings.
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Financial management
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A potential future negative impact to value and/or cash flows is often discussed in terms of probability of loss and the expected magnitude of the loss. This is called:
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risk
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This is a general term for securities like stocks, bonds, and other assets that represent ownership in a cash flow.
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financial asset
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The most commonly accepted groups of asset classes include all of the following except:
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Machinery and equipment
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Which of the following managers would NOT use finance?
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All of these would use finance
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This type of business organization is entirely legally independent from its owners.
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Public corporations
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The practice generally known as double taxation is due to:
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corporate incomes being taxed at the corporate level, then again at the shareholder level when corporate profits are paid out as dividends.
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For corporations, maximizing the value of owner's equity can also be stated as:
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maximizing the stock price.
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This should be the primary objective of a firm as it may actually be the most beneficial for society in the long run.
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Maximizing shareholder value
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Which of these are NOT basic approaches to minimizing the agency problem?
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All of these are basic approaches to minimizing the agency problem.
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This is the set of laws, policies, incentives, and monitors designed to handle the issues arising from the separation of ownership and control.
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Corporate governance
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This group is elected by stockholders to oversee management in a corporation.
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Board of directors
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These individuals follow a firm, conduct their own evaluations of the company's business activities, and report to the investment community.
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Investment analysts
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These individuals help firms access capital markets and advise managers about how to interact with those capital markets.
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Investment bankers
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Which of the following is legal duty between two parties where one party must act in the interest of the other party?
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Fiduciary
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Which of the following can create ethical dilemmas between corporate managers and stockholders?
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Agency relationship
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The opportunity to buy stock at a fixed price over a specific period of time is referred to as:
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stock options.
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The portion of a company's profits that are kept by the company rather than distributed to the stockholders as cash dividends is referred to as:
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retained earnings.
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The overall goal of the financial manager is to:
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maximize shareholder wealth.
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Maximizing owners' equity value means carefully considering all of the following EXCEPT:
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how best to increase the firm's risk.
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The agency relationship in corporate finance refers to:
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when the shareholders hire a manager to run their company.
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Which of the following statements is incorrect?
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Shareholders are responsible for paying off the corporate bonds in the event of a bankruptcy.
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From the perspective of control, the best form of business organization is the:
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sole proprietorship.
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Which statement is incorrect regarding hybrid organizations?
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They offer the same type of control as a sole proprietorship.
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Agency problems exist in which forms of business ownership?
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Corporation
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Methods to minimize agency problem include all EXCEPT:
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allow the CEO to purchase bonds via an employee bond option plan.
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The board of directors:
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are elected by shareholders.
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Which of these does NOT act as a monitor of how the firm is being run outside the firm?
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Members of the board of directors
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Corporate stakeholders include all of the following EXCEPT:
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auditors.
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What is the difference in perspective between finance and accounting?
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Timing
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Which of the following statements is correct?
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Accountants are focused on what happened in the past.