Financial Management Chapter 1 Quiz

Basic areas of finance - correct answer corporate, financial institutions, investments, international investments - correct answer works with financial assets: stocks and bonds, risk vs return and asset allocation financial institutions - correct answer companies that specialize in financial matters and products international finance - correct answer an area of specialization within each of the areas discussed so far; must be familiar with exchange rates and political risk why does marketing finance? - correct answer budgets, marketing research, marketing financial products why does accounting finance? - correct answer dual accounting and finance function; prepare financial statements why does management finance? - correct answer strategic thinking and performance analysis questions finance answers - correct answer what long-term investments should we make, where will we get the long-term financing to pay, how will we manage everyday financial activities financial manager duties - correct answer attempt to answer all questions treasurer duties - correct answer oversee cash management, credit management, capital expenditures, financial planning (bigger jobs) controller duties - correct answer oversee taxes, cost accounting, financial accounting, data processing (smaller, more finite jobs) capital budgeting - correct answer what long-term investments should the business take on capital structure - correct answer how should we pay for our assets, debt or equity accounting equation - correct answer assets = liabilities + owners equity working capital - correct answer how do we manage day-to-day finances 3 major business forms in the US - correct answer sole proprietorship, partnership, corporation agency problem - correct answer separation of ownership and management sarbanes-oxley act - correct answer driven by corporate scandals, intended to strengthen protection vs accounting fraud and financial malpractice agency relationship - correct answer principal hires an agent to represent its interests. stockholders (principals) hire managers (agents) to run the company proxy fight - correct answer the mechanism by which unhappy stockholders can act to replace existing management takeover - correct answer An action whereby a person or group succeeds in ousting a firm's management and taking control of the company. stakeholders - correct answer someone other than a stockholder or creditor who potentially has a claim on the cash flows of the firm cash flows between the firm and financial markets - correct answer (A) financial markets (B) firm's investments in assets (C) assets generate cash (D) some cash goes to corporate taxes (E) some cash is reinvested in firm (F) rest goes back to financial markets (Ex: paid to creditors and shareholders) primary markets - correct answer markets in which the corporation is the seller, and the transaction raises money for the corporations public offering - correct answer primary market selling securities to the general public private placement - correct answer primary market negotiated sale involving a specific buyer SEC - correct answer securities and exchange commission public o