COBA 5102 UPDATED ACTUAL Exam
Questions and CORRECT Answers
Broad Definition of Finance - CORRECT ANSWER - The art and science of managing
wealth
Finance applies specific value to - CORRECT ANSWER - things owned, services used,
decisions made
Financial management - CORRECT ANSWER - organization's approach to valuation
Two dimensions - CORRECT ANSWER - Participants with "extra" investment money
Participants with economically viable ideas
No Extra Money + No Economically Viable Business Ideas - CORRECT ANSWER -
Type 1 : No money and no ideas
No Extra Money + Economically Viable Business Ideas - CORRECT ANSWER - Type 3 :
No money, but ideas
Extra Money + No Economically Viable Business Ideas - CORRECT ANSWER - Type 2 :
Money, but no ideas
Extra Money + Economically Viable Business Ideas - CORRECT ANSWER - Type 4 :
Both money and ideas
Economic Participants:
Type 1 Participants - CORRECT ANSWER - Do not lend or spend in business context
No direct role in financial markets
, Indirect role: to provide labor and consume products
Economic Participants:
Type 4 Participants - CORRECT ANSWER - Use financial tools
-evaluate own businesses
-choose highest-potential ideas
Are self-funded, so no need for financial markets
Economic Participants:
Types 2 and 3 Participants - CORRECT ANSWER - Use financial institutions and
financial markets for mutually beneficial exchange
-Type 2: makes temporary loans to Type 3
-Type 3: typically consists of companies engaging in R & D
How does the Cash Flow? - CORRECT ANSWER - Return of Capital to Investors
-Economically successful projects repay money (plus profit) to investors
The Complete Cash Flows of Finance.
-Friction occurs when not all cash is returned to investors
-Retained Earnings
-Taxes
The Subareas of Finance - CORRECT ANSWER - Investments
-Involve methods and techniques for making decisions about what kinds of securities to own
Financial Management
-Decisions about acquiring and using cash
-Examples include
-Organizing and raising capital (Capital
Structure)
Questions and CORRECT Answers
Broad Definition of Finance - CORRECT ANSWER - The art and science of managing
wealth
Finance applies specific value to - CORRECT ANSWER - things owned, services used,
decisions made
Financial management - CORRECT ANSWER - organization's approach to valuation
Two dimensions - CORRECT ANSWER - Participants with "extra" investment money
Participants with economically viable ideas
No Extra Money + No Economically Viable Business Ideas - CORRECT ANSWER -
Type 1 : No money and no ideas
No Extra Money + Economically Viable Business Ideas - CORRECT ANSWER - Type 3 :
No money, but ideas
Extra Money + No Economically Viable Business Ideas - CORRECT ANSWER - Type 2 :
Money, but no ideas
Extra Money + Economically Viable Business Ideas - CORRECT ANSWER - Type 4 :
Both money and ideas
Economic Participants:
Type 1 Participants - CORRECT ANSWER - Do not lend or spend in business context
No direct role in financial markets
, Indirect role: to provide labor and consume products
Economic Participants:
Type 4 Participants - CORRECT ANSWER - Use financial tools
-evaluate own businesses
-choose highest-potential ideas
Are self-funded, so no need for financial markets
Economic Participants:
Types 2 and 3 Participants - CORRECT ANSWER - Use financial institutions and
financial markets for mutually beneficial exchange
-Type 2: makes temporary loans to Type 3
-Type 3: typically consists of companies engaging in R & D
How does the Cash Flow? - CORRECT ANSWER - Return of Capital to Investors
-Economically successful projects repay money (plus profit) to investors
The Complete Cash Flows of Finance.
-Friction occurs when not all cash is returned to investors
-Retained Earnings
-Taxes
The Subareas of Finance - CORRECT ANSWER - Investments
-Involve methods and techniques for making decisions about what kinds of securities to own
Financial Management
-Decisions about acquiring and using cash
-Examples include
-Organizing and raising capital (Capital
Structure)
