CORPORATE FINANCE -- EXAM #1
(CH. 1 - 5) QUESTIONS AND CORRECT
ANSWERS.
Finance - CORRECT ANSWER (S) -The study of investing
Investing - CORRECT ANSWER (S) -Committing resources today in hopes of earning
a profit in the future
Goal of the firm - CORRECT ANSWER (S) -Maximize stockholder wealth or
maximize the stock price
Three elements of financial decision making - CORRECT ANSWER (S) -1. Money
2. Time
3. Risk (Uncertainty)
, Risk - CORRECT ANSWER (S) -The chance that some unfavorable event will occur
Risk/Expected Return relationship - CORRECT ANSWER (S) -In a financial market
context, the chance that an investment will provide a low or negative return
Proprietorship - CORRECT ANSWER (S) -An unincorporated business owned by one
individual
Partnership - CORRECT ANSWER (S) -An unincorporated business owned by two or
more persons
Corporation - CORRECT ANSWER (S) -A legal entity created by a state, separate
and distinct from its owners and managers, having unlimited life, easy
transferability of ownership, and limited liability
(CH. 1 - 5) QUESTIONS AND CORRECT
ANSWERS.
Finance - CORRECT ANSWER (S) -The study of investing
Investing - CORRECT ANSWER (S) -Committing resources today in hopes of earning
a profit in the future
Goal of the firm - CORRECT ANSWER (S) -Maximize stockholder wealth or
maximize the stock price
Three elements of financial decision making - CORRECT ANSWER (S) -1. Money
2. Time
3. Risk (Uncertainty)
, Risk - CORRECT ANSWER (S) -The chance that some unfavorable event will occur
Risk/Expected Return relationship - CORRECT ANSWER (S) -In a financial market
context, the chance that an investment will provide a low or negative return
Proprietorship - CORRECT ANSWER (S) -An unincorporated business owned by one
individual
Partnership - CORRECT ANSWER (S) -An unincorporated business owned by two or
more persons
Corporation - CORRECT ANSWER (S) -A legal entity created by a state, separate
and distinct from its owners and managers, having unlimited life, easy
transferability of ownership, and limited liability