FIN 305 WEEK 5 EXAM 3 REQUIRES
RESPONDUS LOCKDOWN BROWSER AND
WEBCAM 2026 COMPLETE REVIEW GUIDE A+
◉ Five basic principles of Finance. Answer: Cash flow matters,
money has a time value, risk requires a reward, market prices are
generally right, conflict of interest causes problems.
◉ Principal agent problem. Answer: Financial managers act as
agents for the stockholders who are principals.
Agency Problem- problems and conflicts resulting from separation
of the management and ownership of the firm.
◉ Factors that influence the value of a business. Answer: Cash Flows,
Timing of cash flows, risk of cash flows
◉ Cash flows. Answer: more inflows increase value, more outflows
decrease value. It must be expected that a business will generate
cash in the future in order for it to have value.
◉ Timing of Cash Flows. Answer: The sooner companies expect to
receive cash and the later they expect to pay out cash, the more
valuable the firm is and the higher its stock price will be.
,◉ Risk of Cash Flows. Answer: The riskier expected cash flows are,
the lower the value of the company will be. Companies whose
expected future cash flows are doubtful will be less valuable than
companies whose expected future cash flows are certain.
◉ Financial managers are restricted by. Answer: Environmental
regulations
Workplace safety standards
Civil rights laws
Intellectual property laws
Fair treatment of employees, customers, the community and society
as a whole
◉ Which of the following best describes the LLC?. Answer: A
business owned by non-corporate individuals or groups, each of
whom is taxed
on the business's profits and losses through personal taxes and face
limited liability
for the firm's debts
◉ According to the text, which of the following are considered
ethical challenges in financial management?. Answer: A)
Environmental regulations
, B) Workplace safety standards
C) Intellectual property laws
◉ Which of the following areas of finance is primarily concerned
with evaluating a firm's investment opportunities?. Answer:
Investments
◉ The concept of value is of fundamental importance in finance.
Answer: True
◉ When making financial decisions, we should always look at
marginal cash flows.. Answer: True
◉ Since we earn interest on money received in the future, a dollar
received today is worth less than a dollar received in the future..
Answer: False
◉ Which of the following is least related to the valuation of a firm's
stock for most corporations?. Answer: Market Share
◉ An example of a principal of a firm is:. Answer: The Owner
◉ The sole proprietor:. Answer: has unlimited liability relating to
the business
RESPONDUS LOCKDOWN BROWSER AND
WEBCAM 2026 COMPLETE REVIEW GUIDE A+
◉ Five basic principles of Finance. Answer: Cash flow matters,
money has a time value, risk requires a reward, market prices are
generally right, conflict of interest causes problems.
◉ Principal agent problem. Answer: Financial managers act as
agents for the stockholders who are principals.
Agency Problem- problems and conflicts resulting from separation
of the management and ownership of the firm.
◉ Factors that influence the value of a business. Answer: Cash Flows,
Timing of cash flows, risk of cash flows
◉ Cash flows. Answer: more inflows increase value, more outflows
decrease value. It must be expected that a business will generate
cash in the future in order for it to have value.
◉ Timing of Cash Flows. Answer: The sooner companies expect to
receive cash and the later they expect to pay out cash, the more
valuable the firm is and the higher its stock price will be.
,◉ Risk of Cash Flows. Answer: The riskier expected cash flows are,
the lower the value of the company will be. Companies whose
expected future cash flows are doubtful will be less valuable than
companies whose expected future cash flows are certain.
◉ Financial managers are restricted by. Answer: Environmental
regulations
Workplace safety standards
Civil rights laws
Intellectual property laws
Fair treatment of employees, customers, the community and society
as a whole
◉ Which of the following best describes the LLC?. Answer: A
business owned by non-corporate individuals or groups, each of
whom is taxed
on the business's profits and losses through personal taxes and face
limited liability
for the firm's debts
◉ According to the text, which of the following are considered
ethical challenges in financial management?. Answer: A)
Environmental regulations
, B) Workplace safety standards
C) Intellectual property laws
◉ Which of the following areas of finance is primarily concerned
with evaluating a firm's investment opportunities?. Answer:
Investments
◉ The concept of value is of fundamental importance in finance.
Answer: True
◉ When making financial decisions, we should always look at
marginal cash flows.. Answer: True
◉ Since we earn interest on money received in the future, a dollar
received today is worth less than a dollar received in the future..
Answer: False
◉ Which of the following is least related to the valuation of a firm's
stock for most corporations?. Answer: Market Share
◉ An example of a principal of a firm is:. Answer: The Owner
◉ The sole proprietor:. Answer: has unlimited liability relating to
the business
