FIN 340 Chapters 1,2,3,4,5 UPDATED
ACTUAL Exam Questions and CORRECT
Answers
Investment Decision - CORRECT ANSWER - Spend money (capital budgeting or capital
expenditure)
Financing Decision - CORRECT ANSWER - Raise money for investment
A share of stock is a - CORRECT ANSWER - financial asset
Securities - CORRECT ANSWER - stocks and bonds
Financial managers are responsible for the corporations - CORRECT ANSWER -
financing and investment decisions
CFO - CORRECT ANSWER - Financial policy and financial planning - supervises all
financial functions
Stockholders are - CORRECT ANSWER - owners of a corporation
Managers of a corporation are the ? of the shareholders - CORRECT ANSWER - agents
Sole Proprietorship - CORRECT ANSWER - unlimited liability
Financial objective of corporations financial managers is to - CORRECT ANSWER -
maximize the market value of the firm
, Corporate Governance - CORRECT ANSWER - laws, regulations, institutions, and
corporate practices that protect investors
Professional corporations are often created by - CORRECT ANSWER - doctors and
accountants
Controller - CORRECT ANSWER - ensures that the corporations money is used
efficiently - responsible for internal budgets, accounting, taxes
Treasurer - CORRECT ANSWER - Responsible for maintaining relationships with banks
and other investors, financing, cash management, capital budgeting, capital structure
Stock options - CORRECT ANSWER - Provide powerful incentives to maximize stock
price per share
Capital structure - CORRECT ANSWER - mix of long term debt and equity financing
Agency Problem - CORRECT ANSWER - Managers are agents for shareholders and are
tempted to act in own interests rather than maximizing value
Agency Cost - CORRECT ANSWER - Value lost from agency problems
Financial Intermediaries - CORRECT ANSWER - Important source of financing for
corporations
What is the main investment for a financial intermediary? - CORRECT ANSWER -
financial assets
For large public corporations, the savings flow through - CORRECT ANSWER - financial
markets and intermediaries
ACTUAL Exam Questions and CORRECT
Answers
Investment Decision - CORRECT ANSWER - Spend money (capital budgeting or capital
expenditure)
Financing Decision - CORRECT ANSWER - Raise money for investment
A share of stock is a - CORRECT ANSWER - financial asset
Securities - CORRECT ANSWER - stocks and bonds
Financial managers are responsible for the corporations - CORRECT ANSWER -
financing and investment decisions
CFO - CORRECT ANSWER - Financial policy and financial planning - supervises all
financial functions
Stockholders are - CORRECT ANSWER - owners of a corporation
Managers of a corporation are the ? of the shareholders - CORRECT ANSWER - agents
Sole Proprietorship - CORRECT ANSWER - unlimited liability
Financial objective of corporations financial managers is to - CORRECT ANSWER -
maximize the market value of the firm
, Corporate Governance - CORRECT ANSWER - laws, regulations, institutions, and
corporate practices that protect investors
Professional corporations are often created by - CORRECT ANSWER - doctors and
accountants
Controller - CORRECT ANSWER - ensures that the corporations money is used
efficiently - responsible for internal budgets, accounting, taxes
Treasurer - CORRECT ANSWER - Responsible for maintaining relationships with banks
and other investors, financing, cash management, capital budgeting, capital structure
Stock options - CORRECT ANSWER - Provide powerful incentives to maximize stock
price per share
Capital structure - CORRECT ANSWER - mix of long term debt and equity financing
Agency Problem - CORRECT ANSWER - Managers are agents for shareholders and are
tempted to act in own interests rather than maximizing value
Agency Cost - CORRECT ANSWER - Value lost from agency problems
Financial Intermediaries - CORRECT ANSWER - Important source of financing for
corporations
What is the main investment for a financial intermediary? - CORRECT ANSWER -
financial assets
For large public corporations, the savings flow through - CORRECT ANSWER - financial
markets and intermediaries
