Fundamentals of Corporate Finance
with questions and well verified
answers actual exam!!! 2026
Definition of Corporate Finance - ANSWER -the study of the relationship between
business decisions and the value of the stock in the business
Capital Budgeting - ANSWER -the process of planning and managing a firm's long-term
investments
Capital Structure (or Financial Structure) - ANSWER -the mixture of long-term debt and
equity maintained by a firm to finance its operations
Working Capital - ANSWER -a firm's short-term assets (ie cash, inventory) and liabilities
(ie accounts payable to suppliers)
What is the capital budgeting decision? - ANSWER -the acquisition of long-term
investments. the value of the cash flow generated by an asset exceeds the cost of that asset.
Sole Proprietorship - ANSWER -business owned by a single individual.
PROs: easy and inexpensive to form, individual retains all profits
CONs: individual has unlimited liability to debt, the organization is limited to the life of the
owner, capital is often limited to owner's personal wealth
with questions and well verified
answers actual exam!!! 2026
Definition of Corporate Finance - ANSWER -the study of the relationship between
business decisions and the value of the stock in the business
Capital Budgeting - ANSWER -the process of planning and managing a firm's long-term
investments
Capital Structure (or Financial Structure) - ANSWER -the mixture of long-term debt and
equity maintained by a firm to finance its operations
Working Capital - ANSWER -a firm's short-term assets (ie cash, inventory) and liabilities
(ie accounts payable to suppliers)
What is the capital budgeting decision? - ANSWER -the acquisition of long-term
investments. the value of the cash flow generated by an asset exceeds the cost of that asset.
Sole Proprietorship - ANSWER -business owned by a single individual.
PROs: easy and inexpensive to form, individual retains all profits
CONs: individual has unlimited liability to debt, the organization is limited to the life of the
owner, capital is often limited to owner's personal wealth
