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Corp Finance Exam Questions And Accurate Answers (A+)
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Corp Finance Exam Questions AndAccurate Answers (A+)
Real Assets
can be both tangible assets - such as oil fields, factories and machines - and intangible
assets such as patents, brands and corporate culture.
Financial Assets
are claims on real assets and the cash flow they will generate. This is how companies
pay for their real assets: by selling claims on them. Examples include bank loans and
corporate bonds
Investment decisions
purchases of real assets
Financial decisions
sales of financial assets
Bank loan
When the bank provides the corporation with cash against a financial asset of the
corporation, that is the promise of the corporation to repay the loan along with interest.
Corporate Bonds
It is generated when the corporation sells the bond to investors in return for the promise
to pay interest on the bond as well as to pay off the bond at its maturity.
Securities
The tradable financial assets, include a lot of different financial assets such as stocks
and options.
, Capital Expenditure (CAPEX)
involves buying or building tangible assets
Equity investors
shareholders, who contribute with equity financing
Capital structure
refers to the choice and balance between debt and equity financing
Equity financing
can be raised in two ways - by issuing shares or use cash flow generated by existing
assets and reinvest in new assets.
Payout decision
a decision to either pay dividends to sharholders or repurchase shares
Corporation
a legal entity owned by individual stockholders
goal of managers
maximize the current market value of shareholders' investment in the firm
Financial managers
stands between firm and outside investors. Helps manage the firms operations, by
helping make good investment decisions. DEals with investors.
Financial markets
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