FIN 320F Exam 1 Working Words (Duvic) Study Guide with Complete Solutions

FIN 320F Exam 1 Working Words (Duvic) Study Guide with Complete Solutions UNIT 1 Incentives - Answer️️ -Something that motivates a person to take or avoid taking an action. Resources - Answer️️ -Physical or intangible assets that can be used to accomplish a goal. Confirmation Bias - Answer️️ -The tendency to process information by looking for, or interpreting information that is consistent with one's existing beliefs. Encyclopaedia Brittanica Economic activity - Answer️️ -The production, distribution and consumption of economic assets. Economic assets - Answer️️ -Assets functioning as stores of value and over which ownership rights are enforced by institutional units, individually or collectively, and from which economic benefits may be derived by their owners by holding them, or using them, over a period of time. OECD Glossary of Statistical Terms. Property rights - Answer️️ -The right to control an asset. This control includes how the property should be used, how the benefits from this use are distributed, and the ability to dispose of the asset. ©SOPHIABENNETT 2024/2025 9:45 AM Page | 2 Socialism - Answer️️ -A governmental system with a collective or governmental control of property rights. Capitalism - Answer️️ -A market economy where individuals control property rights, especially the right to control assets used to produce society's economic assets. Corruption - Answer️️ -Dishonest or illegal activity by persons in authority, especially political leaders, government administrators, judicial officials and police UNIT 3 - Answer️️ - Business - Answer️️ -is an organization that raises capital from investors, uses this capital to obtain productive assets, and uses these productive assets to produce economic assets--goods and services--for customers. Profit - Answer️️ -The surplus that occurs when the revenues received from a business' productive efforts exceeds the cost of producing economic assets. Efficiency - Answer️️ -Getting the maximum output from scarce resources. Different levels of efficiency result from how businesses' organize productive effort and raise capital. Proprietorship - Answer️️ -A business where a person combines the functions of owner, manager and worker. Proprietorships are efficient in small-scale operations. General Partnership - Answer️️ -A business where several people share ownership and management. Corporation - Answer️️ -A business that is chartered by government to conduct business. It is a legal entity separate from its owners, and can enter into contracts separate from its owners. ©SOPHIABENNETT 2024/2025 9:45 AM Page | 3 Major financial decisions - Answer️️ -Capital Budgeting/Investment decision: What productive projects should the firm undertake? Capital Structure/Financing decision: How should the company raise capital to finance its activities? Cash management/Working capital management: How does the corporation ensure that it has enough cash to operate on a daily basis? Fiduciary - Answer️️ -A fiduciary is responsible for making decisions that benefit another, not the person making the decisions. Shareholders - Answer️️ -Have control of the company and rights to all residual profit. Also called equity holders and stockholders. Stakeholders - Answer️️ -Anyone other than shareholders or bondh