Finance 301 Exam 1 | Questions with 100% Verified Answers |
Latest Update 2026/2027
Question: Finance
Answer:
involves the management of money
-amount, time, risk
Question: Three areas of Finance
Answer:
Corporate Finance- businesses
Institutions and Markets- financial markets
Investments- investors
Question: corporate finance
Answer:
The activities involved in managing money in a business environment.
Question: institutions and markets
Answer:
Examines the structure of capital markets, the role of financial institutions, the process of
financial intermediation and how money flows into the economy
Question: investments
Answer:
focuses on the valuation techniques and how to value alternative investment
opportunities that are provided primarily through financial markets and institutions
Question: Capital Markets
Answer:
financial markets where issuers and investors buy and sell debt and equity securities
Question: Companies Raise capital through...
Answer:
selling debt instruments
selling stocks/ equity instruments
,Question: Debt
Answer:
obligation to repay borrowed money
Question: Stock
Answer:
represents ownership in the company
Question: Effect of Technology
Answer:
made cost of transactions lower
more transactions made
creation of new financial instruments
sophisticated hedging and investing practices
Question: World's capital markets include a wide variety of organized
exchanged where financial claims are traded. Claim's include...
Answer:
debt, equity, currencies, commodities, and other financial assets.
Question: Economic health
Answer:
Gov
-level of interest rates, relative currency values, and performance of the stock markets
are a gauge of economic health
Firms
- market value of stock is ultimate indicator of performance
Question: International deregulation of past twenty years
Answer:
opened new sources of capital for companies throughout the world.
markets tend to function most efficiently in deregulated environments.
recent breakdowns in accounting and corporate governance at Enron, Worldcom,
adelphia, and Bernie Madoff ponzi schemes, and the crippling effect of the collapse of
the credit markets on the commercial and investment banking institutions has shown that
regulation and oversight are necessary to reduce corruption, greed, and fraud.
, Question: Downside of free flow of capital
Answer:
volatility that may be associated with it.
volatility in 2008 at unprecedented levels
-stock markets moving 3 to 5 percent per day, extremes of 10 percent.
Question: Three Sets of Decisions
Answer:
The investment decision
The Financing decision
The dividend decision
Question: The Investment decision
Answer:
how corporate managers should allocate funds of the company to buy or build projects
and investments that will be worth more than they cost
Question: The Financing Decision
Answer:
how corporate managers should raise money from institutional and individual investors
through the sale of debt and equity claims for the company to finance the investment
projects of the firm
Question: The Dividend Decision
Answer:
the percentage of the company's profits and cash from operations that the company
should reinvest in the business and how much should be returned to the company's
shareholders in the form of dividends
Question: Net Present Value (NPV)
Answer:
is the value associated with investing in a project or venture.
Question: Capital Budgeting
Answer:
valuation, planning, and managing of corporate investments for a firm
Question: Cost of Capital
Answer:
the cost of raising debt and equity for the business
Latest Update 2026/2027
Question: Finance
Answer:
involves the management of money
-amount, time, risk
Question: Three areas of Finance
Answer:
Corporate Finance- businesses
Institutions and Markets- financial markets
Investments- investors
Question: corporate finance
Answer:
The activities involved in managing money in a business environment.
Question: institutions and markets
Answer:
Examines the structure of capital markets, the role of financial institutions, the process of
financial intermediation and how money flows into the economy
Question: investments
Answer:
focuses on the valuation techniques and how to value alternative investment
opportunities that are provided primarily through financial markets and institutions
Question: Capital Markets
Answer:
financial markets where issuers and investors buy and sell debt and equity securities
Question: Companies Raise capital through...
Answer:
selling debt instruments
selling stocks/ equity instruments
,Question: Debt
Answer:
obligation to repay borrowed money
Question: Stock
Answer:
represents ownership in the company
Question: Effect of Technology
Answer:
made cost of transactions lower
more transactions made
creation of new financial instruments
sophisticated hedging and investing practices
Question: World's capital markets include a wide variety of organized
exchanged where financial claims are traded. Claim's include...
Answer:
debt, equity, currencies, commodities, and other financial assets.
Question: Economic health
Answer:
Gov
-level of interest rates, relative currency values, and performance of the stock markets
are a gauge of economic health
Firms
- market value of stock is ultimate indicator of performance
Question: International deregulation of past twenty years
Answer:
opened new sources of capital for companies throughout the world.
markets tend to function most efficiently in deregulated environments.
recent breakdowns in accounting and corporate governance at Enron, Worldcom,
adelphia, and Bernie Madoff ponzi schemes, and the crippling effect of the collapse of
the credit markets on the commercial and investment banking institutions has shown that
regulation and oversight are necessary to reduce corruption, greed, and fraud.
, Question: Downside of free flow of capital
Answer:
volatility that may be associated with it.
volatility in 2008 at unprecedented levels
-stock markets moving 3 to 5 percent per day, extremes of 10 percent.
Question: Three Sets of Decisions
Answer:
The investment decision
The Financing decision
The dividend decision
Question: The Investment decision
Answer:
how corporate managers should allocate funds of the company to buy or build projects
and investments that will be worth more than they cost
Question: The Financing Decision
Answer:
how corporate managers should raise money from institutional and individual investors
through the sale of debt and equity claims for the company to finance the investment
projects of the firm
Question: The Dividend Decision
Answer:
the percentage of the company's profits and cash from operations that the company
should reinvest in the business and how much should be returned to the company's
shareholders in the form of dividends
Question: Net Present Value (NPV)
Answer:
is the value associated with investing in a project or venture.
Question: Capital Budgeting
Answer:
valuation, planning, and managing of corporate investments for a firm
Question: Cost of Capital
Answer:
the cost of raising debt and equity for the business
