COBA 5102 EXAM 2025 QUESTIONS AND
ANSWERS
Broad Definition of Finance - ANS The art and science of managing wealth
Finance applies specific value to - ANS things owned, services used, decisions made
Financial management - ANS organization's approach to valuation
Two dimensions - ANS Participants with "extra" investment money
Participants with economically viable ideas
No Extra Money + No Economically Viable Business Ideas - ANS Type 1 : No money and no
ideas
No Extra Money + Economically Viable Business Ideas - ANS Type 3 : No money, but ideas
Extra Money + No Economically Viable Business Ideas - ANS Type 2 : Money, but no ideas
Extra Money + Economically Viable Business Ideas - ANS Type 4 : Both money and ideas
Economic Participants:
Type 1 Participants - ANS Do not lend or spend in business context
No direct role in financial markets
Indirect role: to provide labor and consume products
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, Economic Participants:
Type 4 Participants - ANS Use financial tools
-evaluate own businesses
-choose highest-potential ideas
Are self-funded, so no need for financial markets
Economic Participants:
Types 2 and 3 Participants - ANS Use financial institutions and financial markets for mutually
beneficial exchange
-Type 2: makes temporary loans to Type 3
-Type 3: typically consists of companies engaging in R & D
How does the Cash Flow? - ANS Return of Capital to Investors
-Economically successful projects repay money (plus profit) to investors
The Complete Cash Flows of Finance.
-Friction occurs when not all cash is returned to investors
-Retained Earnings
-Taxes
The Subareas of Finance - ANS Investments
-Involve methods and techniques for making decisions about what kinds of securities to own
Financial Management
-Decisions about acquiring and using cash
-Examples include
-Organizing and raising capital (Capital
Structure)
-Projects to fund (Capital Budgeting)
-Tax decisions
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ANSWERS
Broad Definition of Finance - ANS The art and science of managing wealth
Finance applies specific value to - ANS things owned, services used, decisions made
Financial management - ANS organization's approach to valuation
Two dimensions - ANS Participants with "extra" investment money
Participants with economically viable ideas
No Extra Money + No Economically Viable Business Ideas - ANS Type 1 : No money and no
ideas
No Extra Money + Economically Viable Business Ideas - ANS Type 3 : No money, but ideas
Extra Money + No Economically Viable Business Ideas - ANS Type 2 : Money, but no ideas
Extra Money + Economically Viable Business Ideas - ANS Type 4 : Both money and ideas
Economic Participants:
Type 1 Participants - ANS Do not lend or spend in business context
No direct role in financial markets
Indirect role: to provide labor and consume products
1 Copyright ©2025 BRAINBARTER ALL RIGHTS RESERVED
, Economic Participants:
Type 4 Participants - ANS Use financial tools
-evaluate own businesses
-choose highest-potential ideas
Are self-funded, so no need for financial markets
Economic Participants:
Types 2 and 3 Participants - ANS Use financial institutions and financial markets for mutually
beneficial exchange
-Type 2: makes temporary loans to Type 3
-Type 3: typically consists of companies engaging in R & D
How does the Cash Flow? - ANS Return of Capital to Investors
-Economically successful projects repay money (plus profit) to investors
The Complete Cash Flows of Finance.
-Friction occurs when not all cash is returned to investors
-Retained Earnings
-Taxes
The Subareas of Finance - ANS Investments
-Involve methods and techniques for making decisions about what kinds of securities to own
Financial Management
-Decisions about acquiring and using cash
-Examples include
-Organizing and raising capital (Capital
Structure)
-Projects to fund (Capital Budgeting)
-Tax decisions
2 Copyright ©2025 BRAINBARTER ALL RIGHTS RESERVED
