FIN 306 QUIZ WEEK 7 FULL SOLUTION STUDY
GUIDE
◉ Capital Structure.
Answer: The mixture of debt and equity maintained by a firm
◉ Working Capital.
Answer: A firm's short-term assets and liabilites
◉ Sole Proprietorship.
Answer: A business owned by a single individual
◉ Parternship.
Answer: A business formed by two or more individuals or entities
◉ Corporation.
Answer: A business created as a distinct legal entity owned by one
or more individuals or entities
◉ The goal of financial management is to.
Answer: maximize the current value per share of the existing stock
, ◉ Agency Problem.
Answer: The possibility of conflict of interest between the owners
and management of a firm
◉ Agency Relationship.
Answer: The relationship between stockholders and management
◉ Managerial Compensation.
Answer: Management will frequently have a significant economic
incentive to increase share value
1. usually tied to financial performance
2. relates to job prospects --> better performers get promoted
◉ Stakeholder.
Answer: Someone other than a stockholder or creditor who
potentially has a claim on the cash flows of the firm
◉ Primary Market.
Answer: In a primary market the corporation is the seller and the
transaction raises money for the corporation
1. public offerings--> involves selling securities to the general public
2. Private placement --> a negotiated sale involving a specific buyer.
GUIDE
◉ Capital Structure.
Answer: The mixture of debt and equity maintained by a firm
◉ Working Capital.
Answer: A firm's short-term assets and liabilites
◉ Sole Proprietorship.
Answer: A business owned by a single individual
◉ Parternship.
Answer: A business formed by two or more individuals or entities
◉ Corporation.
Answer: A business created as a distinct legal entity owned by one
or more individuals or entities
◉ The goal of financial management is to.
Answer: maximize the current value per share of the existing stock
, ◉ Agency Problem.
Answer: The possibility of conflict of interest between the owners
and management of a firm
◉ Agency Relationship.
Answer: The relationship between stockholders and management
◉ Managerial Compensation.
Answer: Management will frequently have a significant economic
incentive to increase share value
1. usually tied to financial performance
2. relates to job prospects --> better performers get promoted
◉ Stakeholder.
Answer: Someone other than a stockholder or creditor who
potentially has a claim on the cash flows of the firm
◉ Primary Market.
Answer: In a primary market the corporation is the seller and the
transaction raises money for the corporation
1. public offerings--> involves selling securities to the general public
2. Private placement --> a negotiated sale involving a specific buyer.
