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FUNDAMENTALS OF CORPORATE FINANCE CH. 1 EXAM SOLVED -3.
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FUNDAMENTALS OF CORPORATE FINANCE CH. 1 EXAM SOLVED -3.
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FUNDAMENTALS OF CORPORATE FINANCE CH. 1 EXAM SOLVED #3Capital budgeting - correct answer the process of planning and managing a firm's long-
term investments
Capital structure - correct answer the mixture of debt and equity maintained by a firm
Working capital - correct answer a firm's short term assets and liabilities
Sole proprietorship - correct answer a business owned by a single individual
Partnership - correct answer a business formed by two or more individuals or entities
Corporation - correct answer a business created as a distinct legal entity owned by one
or more individuals or entities
Agency problem - correct answer the possibility of conflict of interest between the
owners and management of the firm
Stakeholder - correct answer someone other than a stockholder or creditor who
potentially has a claim on the cash flows of the firm.
Capital budgeting - correct answer what long term investments should the firm make?
Capital structuring - correct answer how will this investment be financed?
Working capital management - correct answer how will we manage the day-to-day
financial activities?
What is the primary goal of financial management? - correct answer to maximize share
value for shareholders
Sarbox or sox - correct answer sets up compliance, driven by corporate scandals
Sarbox or sox - correct answer created to minimize accounting fraud
Sarbox or sox - correct answer intended to strengthen protection against accounting
fraud and financial malpractice.
Nasdaq - correct answer digital stock
Nyse - correct answer physical stock
Liquidity - correct answer speed and ease of conversion to cash without significant loss
of value.
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