INTRODUCTION TO FINANCIAL MANAGEMENT -
CHAPTER 1 EXAM QUESTIONS AND ANSWERS
100% CORRECT!!
, What is corporate or business finance? - ANSWER The process of making a company
more valuable in the long-run
what is the role of the financial manager? - ANSWER The financial management
function is usually associated with a top officer of the firm, often called the chief financial
officer (CFO) or vice president of finance.
* Treasurer: oversees cash managment, credit managment, capital expenditures, and
financial planning.
* Controller: oversees taxes, cost accounting, financial accounting, and data
processing.
The financial manager in a corporation makes decisions for the stockholders of the firm.
Financial Management Decisions - ANSWER 1. What long-term investments should the
firm take on? Capital Budgeting
2. Where will we get the long-term financing to pay for the investments? Capital
Structure
3. How will we manage the everyday financial activities of the firm? Working Capital
Management
What is the goal of financial management? - ANSWER 1. maximize the current value
per share of the company's existing stock
2. maximize the market value of the existing owners' equity
* maximize the value of the company and stock - why? because it rewards the owners
four basic areas of finance - ANSWER 1. Corporate finance (or business finance)
2. Investments
3. Financial Institutions
4. International Finance
Investments - ANSWER Broadly speaking, the investments area deals with financial
assets such as stocks and bonds
mutual funds - ANSWER a means of pooling money that is then invested by a portfolio
manager
financial institutions - ANSWER are basically businesses that deal primarily in financial
matters such as:
CHAPTER 1 EXAM QUESTIONS AND ANSWERS
100% CORRECT!!
, What is corporate or business finance? - ANSWER The process of making a company
more valuable in the long-run
what is the role of the financial manager? - ANSWER The financial management
function is usually associated with a top officer of the firm, often called the chief financial
officer (CFO) or vice president of finance.
* Treasurer: oversees cash managment, credit managment, capital expenditures, and
financial planning.
* Controller: oversees taxes, cost accounting, financial accounting, and data
processing.
The financial manager in a corporation makes decisions for the stockholders of the firm.
Financial Management Decisions - ANSWER 1. What long-term investments should the
firm take on? Capital Budgeting
2. Where will we get the long-term financing to pay for the investments? Capital
Structure
3. How will we manage the everyday financial activities of the firm? Working Capital
Management
What is the goal of financial management? - ANSWER 1. maximize the current value
per share of the company's existing stock
2. maximize the market value of the existing owners' equity
* maximize the value of the company and stock - why? because it rewards the owners
four basic areas of finance - ANSWER 1. Corporate finance (or business finance)
2. Investments
3. Financial Institutions
4. International Finance
Investments - ANSWER Broadly speaking, the investments area deals with financial
assets such as stocks and bonds
mutual funds - ANSWER a means of pooling money that is then invested by a portfolio
manager
financial institutions - ANSWER are basically businesses that deal primarily in financial
matters such as:
