Fundamentals of Corporate Finance Ch. 1
Questions and Answers Grade A+ 2023
capital budgeting - -the process of planning and managing a firm's long-term investments
-capital structure - -the mixture of debt and equity maintained by a firm
-working capital - -a firm's short term assets and liabilities
-sole proprietorship - -a business owned by a single individual
-partnership - -a business formed by two or more individuals or entities
-corporation - -a business created as a distinct legal entity owned by one or more individuals or
entities
-agency problem - -the possibility of conflict of interest between the owners and management of
the firm
-stakeholder - -someone other than a stockholder or creditor who potentially has a claim on the
cash flows of the firm.
-capital budgeting - -what long term investments should the firm make?
-capital structuring - -how will this investment be financed?
-working capital management - -how will we manage the day-to-day financial activities?
-what is the primary goal of financial management? - -to maximize share value for shareholders
-sarbox or sox - -sets up compliance, driven by corporate scandals
-sarbox or sox - -created to minimize accounting fraud
-sarbox or sox - -intended to strengthen protection against accounting fraud and financial
malpractice.
-NASDAQ - -digital stock
-NYSE - -physical stock
-liquidity - -speed and ease of conversion to cash without significant loss of value.
-market value - -________ ________ is more important than book value when making decisions
Questions and Answers Grade A+ 2023
capital budgeting - -the process of planning and managing a firm's long-term investments
-capital structure - -the mixture of debt and equity maintained by a firm
-working capital - -a firm's short term assets and liabilities
-sole proprietorship - -a business owned by a single individual
-partnership - -a business formed by two or more individuals or entities
-corporation - -a business created as a distinct legal entity owned by one or more individuals or
entities
-agency problem - -the possibility of conflict of interest between the owners and management of
the firm
-stakeholder - -someone other than a stockholder or creditor who potentially has a claim on the
cash flows of the firm.
-capital budgeting - -what long term investments should the firm make?
-capital structuring - -how will this investment be financed?
-working capital management - -how will we manage the day-to-day financial activities?
-what is the primary goal of financial management? - -to maximize share value for shareholders
-sarbox or sox - -sets up compliance, driven by corporate scandals
-sarbox or sox - -created to minimize accounting fraud
-sarbox or sox - -intended to strengthen protection against accounting fraud and financial
malpractice.
-NASDAQ - -digital stock
-NYSE - -physical stock
-liquidity - -speed and ease of conversion to cash without significant loss of value.
-market value - -________ ________ is more important than book value when making decisions
