PRE-ASSESSMENT QUESTIONS AND ANSWERS FOR FIN 301 COURSE QUESTIONS AND ANSWERS 2025

PRE-ASSESSMENT QUESTIONS AND ANSWERS FOR FIN 301 COURSE QUESTIONS AND ANSWERS 2025 1 Pruhart Tech has an innovative app-based trading platform and expects its growth to boom in the next few years. Before the company goes public, it wants to show a strong history of profit and is focusing its efforts on improving its bottom line (on the income statement). What is a potential negative consequence if the firm focuses solely on profit maximization? Creation of fewer goods and services Correct Unethical behavior and potential scandals Correct. Focusing solely on profit maximization can lead to unethical behavior, as exemplified by the Enron scandal, where the pursuit of profit led to misreported financial statements and significant loss of shareholder value. Reduced efficiency in operations as the company expands Decreased shareholder value and lower dividend payments 2 How might a privately held company define shareholder value differently from a publicly held company? Publicly held companies do not focus on maximizing shareholder value. Privately held companies prioritize global expansion over shareholder value. Correct Privately held companies may value keeping the business within the family. Correct. Privately held family businesses likely place more value on keeping the business in the family and make decisions with that in mind, which may differ from the perspective of publicly held companies. Publicly held companies primarily focus on employee benefits. 3 What effect does a currency devaluation have on a country’s international trade? It directly increases the value of the country’s currency, making imports cheaper. It eliminates the need to hedge currency risk. Continues...