Principles of Finance Test 1 Chapters 1-4 with correct answers 100%

Principles of Finance Test 1 Chapters 1-4 with correct answers 100% 5 basic principles of finance - Correct Answer cash flow is what matters, money has a time value, risks require reward, market prices are generally right, conflicts of interest cause agency problems Incremental Cash Flow - Correct Answer The difference between the cash flow a company will produce both with an without an investment it is thinking about making. Opportunity Cost - Correct Answer The cost of making a choice in term of the next best alternative that must be foregone Efficient market - Correct Answer A market in which the prices of securities at any instant in time fully reflect all publicly available information about the securities and their actual public value. Agency Problem - Correct Answer Problems and conflicts resulting from the separation of the management and ownership of the firm. Finance - Correct Answer The study of how people and business evaluate investments and raise capital to fund them Capital Budgeting - Correct Answer The decision making process with respect to investment in fixed assets. Capital Structure Decision - Correct Answer The decision making process with funding choices and the mix of long term sources of funds Working Capital Management - Correct Answer The management of the firms current assets current assets and short term financing. Financial Markets - Correct Answer Those institutions and procedures that facilitate transactions in all types of financial claims. Sole Proprietorship - Correct Answer A business operation owned and managed by an idividual. Generally does not involve any substantial organizational costs. Partnership - Correct Answer The coming together of two or more individuals joining as co owners to operate a business for profit. General Partnership - Correct Answer Partnership in which all partners are fully liable for the indebtedness incurred by the partnership. Limited Partnership - Correct Answer A partnership in which one or more of the partners has limited liablility, restricted to the amount of capital he or she invests in the partnership. Corporation - Correct Answer An entity that legally functions separate and apart from its owners.