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COB 300 Finance Exam 1 Study Guide Questions and Answers 100% Pass

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  • COB 300
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  • COB 300

COB 300 Finance Exam 1 Study Guide Questions and Answers 100% Pass Finance - the system that includes the circulation of money, the granting of credit, the making of investments, and the provision of banking facilities Financial Management (Corporate Finance) - focuses on decisions relating to...

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  • January 8, 2025
  • 17
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers
  • COB 300
  • COB 300
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COB 300 Finance Exam 1 Study
Guide Questions and Answers 100%
Pass

Finance - ✔✔the system that includes the circulation of money, the granting of credit, the making of

investments, and the provision of banking facilities


Financial Management (Corporate Finance) - ✔✔focuses on decisions relating to how much and what

type of assets to acquire, how to raise the capital needed to purchase assets, and how to run the firm as to

maximize its value; same rules apply to both for-profit and not-for-profit


Capital Markets - ✔✔relate to the markets where interest rates, along with stock and bond prices, are

determined


Federal Reserve System - ✔✔regulates banks and controls the supply of money


Securities and Exchange Commission (SEC) - ✔✔regulates the trading of stock and bonds in public

markets


Investments - ✔✔relate to decisions concerning stock and bonds and include a number of activities


Security Analysis - ✔✔deals with finding the proper value of individual securities


Portfolio Theory - ✔✔deals with the best way to structure portfolios, or "baskets" of stock and bonds




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Market Analysis - ✔✔deals with the issue of whether stock and bond markets at any given time at too

high, too low, or about right; has to do with behavioral finance


Behavioral Finance - ✔✔where investor psychology is examined in an effort to determine whether stock

prices have been bid up to unreasonable heights in a speculative bubble or driven down to unreasonable

lows in a fit of irrational pessimism.


Hierarchy of Organizations - ✔✔- Board of Directors


- CEO


- COO


- CFO


COO - ✔✔often the firm's president and directs the firm's operations: marketing, manufacturing, sales,

and other operating departments


CFO - ✔✔senior vice president and is in charge of accounting, finance, credit policy, decisions regarding

asset acquisition, and investor relations which involves communications with stockholders and the press


Sarbanes-Oxley Act of 2002 - ✔✔provides sweeping new legal protection for employees who report

corporate misconduct


Defined Contribution Pension Plan - ✔✔each year the company puts a specified number of money into

an account that belongs to the employee and the employee must decide how this money is invested and

how much risk they are willing to take


Four Main Forms of Business Organizations - ✔✔1. proprietorships


2. partnerships




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3. corporations


4. limited liability companies (LLCs) and limited liability partnerships (LLPs)


Proprietorships - ✔✔unincorporated business owned by an individual


Advantages of Proprietorship - ✔✔1. they are easy and inexpensive to form


2. they are subject to few government regulations


3. they are subject to lower income taxes than are corporations


Limitations of Proprietorship - ✔✔Unlimited personal liability


Limited life


Transferring ownership is difficult


Difficult to raise capital


Partnership - ✔✔A legal agreement between two or more people to be jointly responsible for the success

or failure of a business.


Advantages of Parnetship - ✔✔easy to establish and inexpensive; firm's income is allocated on a pro rata

basis and is taxed individually so they can avoid corporate tax


Limitations of Partnership - ✔✔unlimited personal liability, difficult to raise capital, life is limited to

owners' lives


Corporations - ✔✔legal entity created by a state, and is separate and distinct from its owners and

managesr




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