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Financial Management Chapter 1 Questions And Answers Latest Update
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Financial Management Chapter 1 Questions And Answers Latest Update
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Financial Management- Chapters 1-8 Questions AndAnswers Latest Update
Agency Problem - correct answers Conflicts that arise out of the separation of management and ownership of the firm
Capital Budgeting - correct answers The decision-making process used to analyze potential investments in fixed assets
Capital Structure - correct answers The mix of long-term sources of funds used by the firm
Corporation - correct answers A business entity that legally functions separate and apart from its owners
Debt - correct answers Money that has been borrowed and must be repaid. This includes such things as bank loans and
bonds
Equity - correct answers The ownership interest in a corporation. It is the stockholders' investment in the firm and the
cumulative profits retained in the business up to the date of the balance sheet
Financial Market - correct answers Mechanisms that allow people to easily buy and sell financial claims
General Partner - correct answers A member of a general partnership or a member of a limited partnership who actually
runs the business and faces unlimited liability for the firm's debts
General Partnership - correct answers A partnership in which all the partners are fully liable for the indebtness incurred
by the partnership
Limited Liability Company (LLC) - correct answers A business organizational form that blends elements of the partnership
and corporate forms
Limited Partner - correct answers A member of a limited partnership who is only liable up to the amount invested by
that member
, Limited Partnership - correct answers A partnership in which one or more of the partners has limited liability that is
restricted to the amount of capital he or she invests in the partnership
Opportunity Cost - correct answers The value of the next best alternative that is foregone as a result of making a
decision
Partnership - correct answers An association of two or more individuals joining together as co-owners to operate a
business profit
Shareholders - correct answers The owners of the firm; those who own shares of stock in a corporation
Shares - correct answers Units of ownership
Sole Proprietorship - correct answers A business owned by a single individual
Stockholders - correct answers The owners of the corporation's stock. The corporation is legally owned by its current set
of stockholders, or owners, who elect a board of directors
Working Capital Management - correct answers Management of day-to-day operations and decisions related to working
capital and short-term financing
Accredited Investor - correct answers Investor who is permitted to invest in certain types of higher-risk investments.
These investors include wealthy individuals, corporations, endowments, and retirement plans
Bond - correct answers A long-term (10 year or more) promissory note issued by borrower, promising to pay the owner
of the security a predetermined amount of interest each year
Common Stock - correct answers A form of equity security that represents the residual ownership of the firm
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