Bcor 2204 Fianance Quiz 1 Updated Actual Questions And Correct Answers

BCOR 2204 FIANANCE QUIZ 1 UPDATED ACTUAL
QUESTIONS AND CORRECT ANSWERS

Question:
1. The objective of finance

Answer:
Maximize profit

Question:
2. Finance

Answer:
The science (accounting) and the art (tradeoff and risk) of valuing and managing
money

Question:
3. NPV Model

Answer:
Consists of PV, FV, PMT, N, and I

Question:
4. Intrinsic value

Answer:
The value of any security is the market value

Question:
5. Expected balue

Answer:
Future cash flows

Question:
6. Careers in finance

Answer:
Wall Street professions are all about intermediation

Question:
7. Balance sheet

Answer:
Investment and finance decisions

, Question:
8. Goal of the firm

Answer:
Maximize shareholder wealth

Question:
9. Profit maximization may not lead to the highest possible
share price (3 reasons)

Answer:
1. Timing
2. Profits do not necessarily result in cash flows available
3. Profit maximization fails to account for risk

Question:
10. Corporate governance

Answer:
The rules, processes, and laws by which companies are operated, controlled, and
regulated

Question:
11. Principal-agent relationship

Answer:
An arrangement in which an agent acts on behalf of a principal

Question:
12. Agency problems

Answer:
Arise when managers placepersonal goals ahead of the goals of shareholders

Question:
13. Agency costs

Answer:
Arise from agency problems that are borne by shareholders and represent a loss
of shareholder wealth

Question:
14. Management compensation plans

Answer:
Must ensure managers' interests are aligned with shareholders