FINANCIAL MANAGEMENT EXAM 1 COMPLETE
COURSE REVIEW GUIDE
◉ Finance grew out of ________________ and _________________
Answer: economics; accounting
◉ Financial Management (corporate finance)
Answer: focuses on decisions about acquiring assets, raising capital,
and running firm so it maximizes value
◉ Capital Markets
Answer: relate to markets where interest rates and stock and bond
prices are determined
◉ Investments
Answer: involve decisions concerning stocks and bonds and include
security analysis, portfolio theory, and market analysis
◉ Main forms of business organizations
Answer: Proprietorships
Partnerships
Corporations
,Limited Liability Companies & Partnerships
◉ Most businesses are _________________
Answer: proprietorships
◉ Based on dollar value of sales, most business is done by
____________________
Answer: corporations
◉ Most businesses frequently started as ________________ and then
converted to _________________
Answer: proprietorships; corporations
◉ Proprietorships are subject to ______________ government
regulations
Answer: few
◉ Primary financial goal of a corporation is
_________________________________
Answer: shareholder wealth maximization
◉ Most managers recognize that being socially responsible is
________________________________________________________
,Answer: important and generally consistent with achieving financial
goals
◉ The _____________________ views determine firms actual stock price
Answer: marginal investor's
◉ Firm must provide right incentives if they are to get
_______________________ to focus on long-run value maximization
Answer: managers
◉ Conflicts exist between managers and __________________, and
stockholders and ____________________
Answer: stockholders; debtholders
◉ Managers can be motivated to act in stockholders best interest
through
Answer: reasonable compensation packages
firing managers
threat of hostile takeovers
◉ ______________ generally receive fixed payments while
_________________ do better when the firm does better
Answer: bondholders; stockholders
, ◉ the use of additional _________________ increases stockholder-
debtholder conflicts
Answer: debt
◉ The owners of the corporation are the ____________________
Answer: shareholders
◉ Primary goal of corporate management is to maximize
shareholders wealth by
Answer: maximizing company's stock price over the long run
◉ The CFO is not responsible for which of the following:
- Human resources
- Marketing
- Administration
- Research and Development
- Legal Issues
Answer: human resources
marketing
administration
research and development
COURSE REVIEW GUIDE
◉ Finance grew out of ________________ and _________________
Answer: economics; accounting
◉ Financial Management (corporate finance)
Answer: focuses on decisions about acquiring assets, raising capital,
and running firm so it maximizes value
◉ Capital Markets
Answer: relate to markets where interest rates and stock and bond
prices are determined
◉ Investments
Answer: involve decisions concerning stocks and bonds and include
security analysis, portfolio theory, and market analysis
◉ Main forms of business organizations
Answer: Proprietorships
Partnerships
Corporations
,Limited Liability Companies & Partnerships
◉ Most businesses are _________________
Answer: proprietorships
◉ Based on dollar value of sales, most business is done by
____________________
Answer: corporations
◉ Most businesses frequently started as ________________ and then
converted to _________________
Answer: proprietorships; corporations
◉ Proprietorships are subject to ______________ government
regulations
Answer: few
◉ Primary financial goal of a corporation is
_________________________________
Answer: shareholder wealth maximization
◉ Most managers recognize that being socially responsible is
________________________________________________________
,Answer: important and generally consistent with achieving financial
goals
◉ The _____________________ views determine firms actual stock price
Answer: marginal investor's
◉ Firm must provide right incentives if they are to get
_______________________ to focus on long-run value maximization
Answer: managers
◉ Conflicts exist between managers and __________________, and
stockholders and ____________________
Answer: stockholders; debtholders
◉ Managers can be motivated to act in stockholders best interest
through
Answer: reasonable compensation packages
firing managers
threat of hostile takeovers
◉ ______________ generally receive fixed payments while
_________________ do better when the firm does better
Answer: bondholders; stockholders
, ◉ the use of additional _________________ increases stockholder-
debtholder conflicts
Answer: debt
◉ The owners of the corporation are the ____________________
Answer: shareholders
◉ Primary goal of corporate management is to maximize
shareholders wealth by
Answer: maximizing company's stock price over the long run
◉ The CFO is not responsible for which of the following:
- Human resources
- Marketing
- Administration
- Research and Development
- Legal Issues
Answer: human resources
marketing
administration
research and development
