AGEC 4040 Exam 1 Questions and Answers Already Passed Latest Update 2025-2026
finance - Answers the science and art of managing money
financial services - Answers finance concerned with getting advice and financial products to
customers
managerial finance - Answers concerned with the duties of the financial manager
financial managers do what? - Answers administer the financial affairs of all types of business
sole proprietorship - Answers a business owned by one person
partnership - Answers a business owned by two or more people
corporation - Answers an entity created by law; has the legal powers of an individual
stakeholders - Answers groups such as employees, (customers, suppliers, creditors, owners,
and others) who have a direct economic link to the firm
business ethics - Answers the standards of conduct that apply to persons engaged in
commerce
marginal cost-benefit analysis - Answers action should only be taken when the added benefits
exceed the added costs
corporate governance - Answers the rules, processes, and laws by which companies are
operated, controlled, and regulated
individual investors - Answers investors who own relatively small quantities of shares
institutional investors - Answers investment professionals, such as banks, (insurance
companies, mutual funds, and pension funds), that are paid to hold securities on behalf of
others
principal-agent relationship - Answers an arrangement in which an agent acts on behalf of a
principal
agency problems - Answers arise when managers place personal goals ahead of the goals of
shareholders
agency costs - Answers arise from agency problems that are borne by shareholders and
represent a loss of shareholder wealth
incentive plans - Answers management compensation plans that tie management
compensation to share price
performance plans - Answers tie management compensation to measures such as EPS or
, growth in EPS
intermediaries - Answers channel the savings of individuals, businesses, and governments into
loans or investments
commercial banks - Answers institutions that provide savers with a secure place to invest their
funds and offer loans to individuals and business borrowers
investment banks - Answers institutions that assist companies in raising capital, advise firms
on major transactions such as mergers or financial restructurings, and engage in trading and
market making activities
shadow banking system - Answers a group of institutions that engage in lending activities,
much like traditional banks, but do not accept deposits, and are not subject to the same
regulations as traditional banks
financial markets - Answers forums in which suppliers of funds and demanders of funds can
transact business directly
private placement - Answers involves the sale of a new security directly to an investor or group
of investors
public offering of securities - Answers the sale of either bonds or stocks to the general public
primary market - Answers the financial market in which securities are initially issued
secondary markets - Answers financial markets in which preowned (those that are not new
issues) are traded
money market - Answers created by a financial relationship between suppliers and demanders
of short-term funds
Eurocurrency market - Answers the international equivalent of the domestic (U.S.) money
market
broker markets - Answers securities exchanges on which the two sides of a transaction, the
buyer and seller, are brought together to trade securities
capital market - Answers a market that enables suppliers and demanders of long-term funds to
make transactions
bonds - Answers long-term debt instruments used by businesses and government to raise large
sums of money
common stock - Answers units of ownership interest or equity in a corporation
preferred stock - Answers a special form of ownership that has features of both a bond and
finance - Answers the science and art of managing money
financial services - Answers finance concerned with getting advice and financial products to
customers
managerial finance - Answers concerned with the duties of the financial manager
financial managers do what? - Answers administer the financial affairs of all types of business
sole proprietorship - Answers a business owned by one person
partnership - Answers a business owned by two or more people
corporation - Answers an entity created by law; has the legal powers of an individual
stakeholders - Answers groups such as employees, (customers, suppliers, creditors, owners,
and others) who have a direct economic link to the firm
business ethics - Answers the standards of conduct that apply to persons engaged in
commerce
marginal cost-benefit analysis - Answers action should only be taken when the added benefits
exceed the added costs
corporate governance - Answers the rules, processes, and laws by which companies are
operated, controlled, and regulated
individual investors - Answers investors who own relatively small quantities of shares
institutional investors - Answers investment professionals, such as banks, (insurance
companies, mutual funds, and pension funds), that are paid to hold securities on behalf of
others
principal-agent relationship - Answers an arrangement in which an agent acts on behalf of a
principal
agency problems - Answers arise when managers place personal goals ahead of the goals of
shareholders
agency costs - Answers arise from agency problems that are borne by shareholders and
represent a loss of shareholder wealth
incentive plans - Answers management compensation plans that tie management
compensation to share price
performance plans - Answers tie management compensation to measures such as EPS or
, growth in EPS
intermediaries - Answers channel the savings of individuals, businesses, and governments into
loans or investments
commercial banks - Answers institutions that provide savers with a secure place to invest their
funds and offer loans to individuals and business borrowers
investment banks - Answers institutions that assist companies in raising capital, advise firms
on major transactions such as mergers or financial restructurings, and engage in trading and
market making activities
shadow banking system - Answers a group of institutions that engage in lending activities,
much like traditional banks, but do not accept deposits, and are not subject to the same
regulations as traditional banks
financial markets - Answers forums in which suppliers of funds and demanders of funds can
transact business directly
private placement - Answers involves the sale of a new security directly to an investor or group
of investors
public offering of securities - Answers the sale of either bonds or stocks to the general public
primary market - Answers the financial market in which securities are initially issued
secondary markets - Answers financial markets in which preowned (those that are not new
issues) are traded
money market - Answers created by a financial relationship between suppliers and demanders
of short-term funds
Eurocurrency market - Answers the international equivalent of the domestic (U.S.) money
market
broker markets - Answers securities exchanges on which the two sides of a transaction, the
buyer and seller, are brought together to trade securities
capital market - Answers a market that enables suppliers and demanders of long-term funds to
make transactions
bonds - Answers long-term debt instruments used by businesses and government to raise large
sums of money
common stock - Answers units of ownership interest or equity in a corporation
preferred stock - Answers a special form of ownership that has features of both a bond and
