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Exam (elaborations)

FIN 3113 Final Exam questions and correct answers
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What are the 3 main areas of concern in corporate finance? - correct answers capital budgeting, capital structure, and working capital management advantages of sole proprietorship - correct answers easiest to start, least regulated, single owner keeps all profit, taxed once as personal income ...

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  • July 2, 2023
  • 15
  • 2022/2023
  • Exam (elaborations)
  • Questions & answers

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  • fin 3113 final exam 2023

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  • FIN 3113
  • FIN 3113

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FIN 3113 Final Exam
What are the 3 main areas of concern in corporate finance? - correct answers capital budgeting, capital structure, and working capital management
advantages of sole proprietorship - correct answers easiest to start, least regulated, single owner keeps all profit, taxed once as personal income
disadvantages of sole proprietorship - correct answers limited to life of owner, equity capital limited to owner's personal wealth, unlimited liability, and difficult to sell ownership interest
advantages of partnerships - correct answers two or more owners, more capital available, easy to start, income taxed once as personal income
disadvantages of partnerships - correct answers unlimited liability, partnership dissolves when one partner dies, difficult to transfer ownership
advantages of corporation - correct answers limited liability, unlimited life, separation of ownership and management, transfer of ownership is easy, easier to raise capital
disadvantages of corporations - correct answers separation of ownership and management, double taxation
What is the goal of financial management? - correct answers maximize the current value per share of the existing stock (or owners' equity)
Are stockholders and stakeholders the same? - correct answers No, a stakeholder is someone ofter than a stockholder or creditor who has a claim on the cash flows of the firm
How do dealer and auction markets differ? - correct answers an auction market has a physical location, and most of the buying and selling in a dealer market is done by the dealer Net Working Capital - correct answers difference between a firm's current assets and current liabilities
Does cash flow at the end or beginning of an annuity due? - correct answers beginning
Does cash flow at the end or beginning of an ordinary annuity? - correct answers end
What is the goal of the corporation (aka the goal of the financial manager)? - correct answers 1. maximize wealth of owners 2. maximize common stock prices 3. maximize total market value of firm
What kinds of decisions do financial managers make? - correct answers 1. capital budgeting 2. capital structure 3. working capital management
What are the two possible sources of return for a common stockholder? - correct answers 1. cash dividend payments 2. cash gains
profit maximization or value maximization? - correct answers Profit-short run deal Value-long run deal
What influences movements in common stock prices? - correct answers internal developments (within company), inflation and interest rates, exchange rates, hype
How do common stock prices change? - correct answers changes in dividends, interest rate and growth rate result in change of price to equilibrate
functions of financial markets - correct answers 1. moving cash over time 2. risk transfer and diversification 3. liquidity 4. payment mechanism
What info. can be obtained from financial markets? - correct answers 1. commodity prices 2. interest rates --> opportunity cost 3. company market values (prices)
How are corporate taxes calculated? - correct answers using a table of marginal rates

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