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FUNDAMENTALS OF FINANCE CHAPTER 1 - INTRODUCTION TO CORPORATE FINANCE EXAM ANSWERED #5
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FUNDAMENTALS OF FINANCE CHAPTER 1 - INTRODUCTION TO CORPORATE FINANCE EXAM ANSWERED #5
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FUNDAMENTALS OF FINANCE CHAPTER 1 - INTRODUCTIONTO CORPORATE FINANCE EXAM ANSWERED #5
What are the four basic areas of finance? - correct answer 1. Corporate Finance
2. Investments
3. Financial Institutions
4. International Finance
What are the three types of financial management decisions? - correct answer 1.
Capital budgeting
2. Capital structure
3. Working capital management
What question is capital budgeting designed to answer? - correct answer What long-
term investments or projects should the business take on?
What question is capital structure designed to answer? - correct answer How should we
pay for our assets?
Should we use debt or equity?
What question is working capital management designed to answer? - correct answer
How do we manage the day-to-day finances of the firm?
What are the three major forms of business organization? - correct answer Sole
proprietorship
Partnership
Corporation
What is the goal of financial management? - correct answer Maximize shareholder
value
What are agency problems? - correct answer Conflict of interest between principal
(shareholder) and agent (management)
The top financial manager within a firm is usually the - correct answer Chief Financial
Officer (CFO)
Treasurer - correct answer oversees cash management, credit management, capital
expenditures and financial planning
Controller - correct answer oversees taxes, cost accounting, financial accounting and
data processing
Sole proprietorship - correct answer single owner
Sole Proprietorship Advantages - correct answer Easiest to start
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