CHAPTER 1: AN OVERVIEW OF FINANCIAL
MANAGEMENT EXAM QUESTIONS AND
ANSWERS 100% CORRECT!!
, finance - ANSWER the system that includes the circulation of money, the granting of
credit, the making of investments, and the provision of banking facilities
financial management (corporate finance) - ANSWER focuses on decisions relating to
how much and what types of assets to acquire, how to raise the capital needed to
purchase assets, and how to run the firm so as to maximize its value
capital markets - ANSWER relate to the markets where interest rates, along with stock
and bond prices, are determined
investments - ANSWER relate to decisions concerning with stocks and bonds and
include a number of activites
security analysis - ANSWER deals with finding the proper values of individual securities
(i.e. stocks and bonds)
portfolio theory - ANSWER deals with the best way to structure portfolios, or 'baskets' of
stocks and bonds
market analysis - ANSWER deals with the issue of whether stock and bond markets at
any given time are 'too high', 'too low', or 'about right.'
behavioral finance - ANSWER investor psychology is examined in an effort to determine
whether stock prices have been bid up to unreasonable heights in a speculative bubble
or driven down to unreasonable lows in a fit of irrational pessimism
finance within the organization - ANSWER board of directors--> CEO --> COO (chief
operating officer) + CFO (chief financial officer)
COO--> Marketing, Production, HR, Other Operating Departments
CFO--> Accounting, Treasury, Credit, Legal, Capital Budgeting, and Investor Realtions
Sarbanes-Oxley Act - ANSWER A law passed by Congress that requires the CEO and
CFO to certify that their firm's financial statements are accurate
4 main forms of business organizations - ANSWER 1) proprietorships
MANAGEMENT EXAM QUESTIONS AND
ANSWERS 100% CORRECT!!
, finance - ANSWER the system that includes the circulation of money, the granting of
credit, the making of investments, and the provision of banking facilities
financial management (corporate finance) - ANSWER focuses on decisions relating to
how much and what types of assets to acquire, how to raise the capital needed to
purchase assets, and how to run the firm so as to maximize its value
capital markets - ANSWER relate to the markets where interest rates, along with stock
and bond prices, are determined
investments - ANSWER relate to decisions concerning with stocks and bonds and
include a number of activites
security analysis - ANSWER deals with finding the proper values of individual securities
(i.e. stocks and bonds)
portfolio theory - ANSWER deals with the best way to structure portfolios, or 'baskets' of
stocks and bonds
market analysis - ANSWER deals with the issue of whether stock and bond markets at
any given time are 'too high', 'too low', or 'about right.'
behavioral finance - ANSWER investor psychology is examined in an effort to determine
whether stock prices have been bid up to unreasonable heights in a speculative bubble
or driven down to unreasonable lows in a fit of irrational pessimism
finance within the organization - ANSWER board of directors--> CEO --> COO (chief
operating officer) + CFO (chief financial officer)
COO--> Marketing, Production, HR, Other Operating Departments
CFO--> Accounting, Treasury, Credit, Legal, Capital Budgeting, and Investor Realtions
Sarbanes-Oxley Act - ANSWER A law passed by Congress that requires the CEO and
CFO to certify that their firm's financial statements are accurate
4 main forms of business organizations - ANSWER 1) proprietorships
