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Foundations of Financial Management, 18th Edition SOLUTION MANUAL by Stanley Block, Geoffrey Hirt, Verified Chapters 1 - 21, Complete Newest Version $18.49
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Foundations of Financial Management, 18th Edition SOLUTION MANUAL by Stanley Block, Geoffrey Hirt, Verified Chapters 1 - 21, Complete Newest Version
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Foundations of Financial Management, 18th Edition SOLUTION MANUAL by Stanley Block, Geoffrey Hirt, Verified Chapters 1 - 21, Complete Newest VersionSOLUTION MANUAL For Foundations of Financial Management, 18th Edition by Stanley Block, Geoffrey Hirt, Verified Chapters 1 - 21, Complete Newest Versio...

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  • October 30, 2024
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SOLUTION MANUAL
Foundations of Financial Management,
18th Edition by Stanley Block, Geoffrey Hirt,
Chapters 1 – 21, Complete

,
, Chapter 1 g


The Goals and Functions of Financial Management
g g g g g g




Discussion Questions
g




1-1 Whatgeffectgdidgthegrecessiongofg2007-2009ghavegonggovernmentgregulation?

Itgwasggreatlygincreased.

1-2 Whatgadvantagesgdoesgagsolegproprietorshipgoffer?gWhatgisgagmajorgdrawbackgofgt
hisgtypegofgorganization?

Agsolegproprietorshipgoffersgthegadvantagegofgsimplicitygofgdecisiongmakinggandglow
gorganizational gandgoperating gcosts.gAgmajor gdrawbackgis gthatgtheregisgunlimitedgliab

ilitygtogthegowner.

1-3 Whatgformgofgpartnershipgallowsgsomegofgtheginvestorsgtoglimitgtheirgliability?gEx
plaingbriefly.

Aglimitedgpartnershipgallowsgsomegofgthegpartnersgtoglimitgtheirgliability.gUndergthisgar
rangement,gonegorgmoregpartnersgaregdesignatedggeneralgpartnersgandghavegunlimi
tedgliabilitygforgthegdebtsgofgthegfirm;gothergpartnersgaregdesignatedglimitedgpartnersg
andgaregliablegonlygforgtheirginitialgcontribution.gTheglimitedgpartnersgaregnormallygpro
hibitedgfromgbeinggactivegingthegmanagementgofgthegfirm.

1-4 Ingagcorporation,gwhatggroupghasgthegultimategresponsibilitygforgprotectinggandgma
naginggthegstockholders’ginterests?

Thegboardgofgdirectors.

1-5 Whatgdocumentgisgnecessarygtogformgagcorporation?

Thegarticlesgofgincorporation.

1-6 Whatgissuegdoesgagencygtheorygexamine?gWhygisgitgimportantgingagpublicgcorpo
rationgrathergthangingagprivategcorporation?

, Agencygtheorygexaminesgthegrelationshipgbetweengthegownersgofgthegfirmgandgtheg
managersgofgthegfirm.gIngprivatelygownedgfirms,gmanagementgandgthegownersgaregu
suallygthegsamegpeople.gManagementgoperatesgthegfirmgtogsatisfygitsgownggoals,gne
eds,gfinancialgrequirementsgandgtheglike.gAsgagcompanygmovesgfromgprivategtogpubli
cgownership,gmanagementgnowgrepresentsgallgowners.gThisgplacesgmanagementgi
ngthegagencygpositiongofgmakinggdecisionsgingthegbestginterestgofgallgshareholders.

1-7 Whatgareginstitutionalginvestorsgimportantgingtoday’sgbusinessgworld?
Becauseginstitutionalginvestorsgsuchgasgpensiongfundsgandgmutualgfundsgowngaglarg
egpercentagegofgmajorgU.S.gcompanies,gtheygareghavinggmoregtogsaygaboutgthegwayg
publiclygownedgcompaniesgaregmanaged.gAsgaggroup,gtheyghavegthegabilitygtogvotegla
rgegblocksgofgsharesgforgthegelectiongofgagboardgofgdirectors,gwhichgisgsupposedgtogrun
gthegcompanygingangefficient,gcompetitivegmanner.gThegthreatgofgbeinggablegtogreplac

egpoorgperforminggboardsgofgdirectorsgmakesginstitutionalginvestorsgquiteginfluential.g
Sincegtheseginstitutions,glikegpensiongfundsgandgmutualgfunds,grepresentgindividualgw
orkersgandginvestors,gtheyghavegagresponsibilitygtogseegthatgthegfirmgisgmanagedginga
ngefficientgandgethicalgway.

1-8 Whygisgprofitgmaximization,gbygitself,ganginappropriateggoal?gWhatgisgmeantgbygthe
ggoal gofgmaximizationgofgshareholder gwealth?




Thegproblemgwithgagprofitgmaximizationggoalgisgthatgitgfailsgtogtakegaccountgofgrisk,gth
egtiminggofgthegbenefitsgisgnotgconsidered,gandgprofitgmeasurement gisgagveryginexactg
process.gTheggoalgofgshareholders’gwealthgmaximizationgimpliesgthatgthegfirmgwillgat
temptgtogachievegtheghighestgpossiblegtotalgvaluationgingthegmarketplace.gItgisgthegon
egoverridinggobjectivegofgthegfirmgandgshouldginfluencegeverygdecision.

1-9 Whengdoesginsidergtradinggoccur?gWhatggovernmentgagencygisgresponsiblegforgpr
otectinggagainstgthegunethicalgpracticegofginsidergtrading?

Insidergtradinggoccursgwhenganyonegwithgnon-
publicginformationgbuysgorgsellsgsecuritiesgtogtakegadvantagegofgthatgprivateginforma
tion.gThegSecuritiesgandgExchangegCommissiongisgresponsiblegforgprotectinggmark
etsgagainstginsidergtrading.gIngthegpast,gpeopleghaveggonegtogjailgforgtradinggongnon-
publicginformation.gThisghasgincludedgcompanygofficers,ginvestmentgbankers,gprint
ersgwhoghaveginformationgbeforegitgisgpublished,gandgevengtruckgdriversgwhogdeliver
gbusinessgmagazinesgandgreadgpositivegorgnegativegarticlesgaboutgagcompanygbefor

egthegmagazinegisgongthegnewsstandsgandgthengplacegtradesgorghavegfriendsgplacegt
radesgbasedgongthatginformation.gThegSECghasgprosecutedganyonegwhogprofitsgfro
mginsideginformation.

1-10 Ingtermsgofgtheglifegofgthegsecuritiesgoffered,gwhatgisgthegdifferencegbetweengmon
eygandgcapitalgmarkets?

Moneygmarketsgrefergtogthosegmarketsgdealinggwithgshort-
termgsecuritiesgthatghavegaglifegofgonegyeargorgless.gCapitalgmarketsgrefergtogsecuriti
esgwithgaglifegofgmoregthangonegyear.

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