FINC 3600 exam 1 Questions – 100%
Correct, Expert Verified Answers with
A+ Grade Assurance
what are the basic areas of finance ANSW ✔✔ business finance/corporate
finance, investments, fintech, financial institutions, international finance
what is corporate finance ANSW ✔✔ What long term investments should you
make (answers the questions what should we invest in, how do we finance
those investments, and where do we get the money).
what is the balance sheet identity ANSW ✔✔ assets= liabilities + stockholders'
equity
assets represents what on the balance sheet ANSW ✔✔ what we own/have
stockholders' equity and liabilities represent what on the balance sheet ANSW
✔✔ how we paid for the things we own/have (liabilities)
what should we invest in on the balance sheet ANSW ✔✔ fixed assets
(tangible, intangible assets)
how do we finance our investments on the balance sheet ANSW ✔✔ through
long-term debt and equity
how do we manage day-to-day operations on the balance sheet ANSW ✔✔
current assets and current liabilities
, what is capital budgeting ANSW ✔✔ the process of planning and managing a
firm's long term investments
how do we capital budget ANSW ✔✔ 1. estimate cash flows (what kind of
money will come in? how soon)
2. estimate the cost of cash flows (might borrow from the bank, we have to be
able to finance the capital)
3. discount the cash flows
what is capital structure ANSW ✔✔ the mix of debt and equity maintained by
a firm (the ratio)
what does short term cash flow management entail ANSW ✔✔ 1. networking
capital (current assets - current liabilities)
2. cash management (how liquid are we)
3. credit management
explain the relationship between the firm and the financial markets ANSW
✔✔ 1. the firm issues securities to the financial markets, thus receiving
capital/money
2. they use the capital raised in the financial market to invest in assets which in
turn drive up the revenue (think of a restaurant buying more seating thus
being able to sit more guests)
3. the cash floes from the firm
4. the cash/revenue is taxed by the government
5. with the left over money after taxation, the company can pay shareholders
in dividends or...
6. reinvest the money into the company/cashflow
Correct, Expert Verified Answers with
A+ Grade Assurance
what are the basic areas of finance ANSW ✔✔ business finance/corporate
finance, investments, fintech, financial institutions, international finance
what is corporate finance ANSW ✔✔ What long term investments should you
make (answers the questions what should we invest in, how do we finance
those investments, and where do we get the money).
what is the balance sheet identity ANSW ✔✔ assets= liabilities + stockholders'
equity
assets represents what on the balance sheet ANSW ✔✔ what we own/have
stockholders' equity and liabilities represent what on the balance sheet ANSW
✔✔ how we paid for the things we own/have (liabilities)
what should we invest in on the balance sheet ANSW ✔✔ fixed assets
(tangible, intangible assets)
how do we finance our investments on the balance sheet ANSW ✔✔ through
long-term debt and equity
how do we manage day-to-day operations on the balance sheet ANSW ✔✔
current assets and current liabilities
, what is capital budgeting ANSW ✔✔ the process of planning and managing a
firm's long term investments
how do we capital budget ANSW ✔✔ 1. estimate cash flows (what kind of
money will come in? how soon)
2. estimate the cost of cash flows (might borrow from the bank, we have to be
able to finance the capital)
3. discount the cash flows
what is capital structure ANSW ✔✔ the mix of debt and equity maintained by
a firm (the ratio)
what does short term cash flow management entail ANSW ✔✔ 1. networking
capital (current assets - current liabilities)
2. cash management (how liquid are we)
3. credit management
explain the relationship between the firm and the financial markets ANSW
✔✔ 1. the firm issues securities to the financial markets, thus receiving
capital/money
2. they use the capital raised in the financial market to invest in assets which in
turn drive up the revenue (think of a restaurant buying more seating thus
being able to sit more guests)
3. the cash floes from the firm
4. the cash/revenue is taxed by the government
5. with the left over money after taxation, the company can pay shareholders
in dividends or...
6. reinvest the money into the company/cashflow
