FINC 3610 EXAM 1 QUESTIONS WITH
100% CORRECT ANSWERS | LATEST
VERSION 2025/2026.
4 basic areas of finance - ANS •Corporate finance
•Investments
•Financial institutions
•International finance
Investments - ANS -Works with financial assets such as stocks and bonds
-The Value of financial assets, risk versus return and asset allocation
3 main financial institutions - ANS 1. Banks - commercial and investment, credit unions,
savings and loans
2. Insurance companies
3. Brokerage firms
Financial management decisions - ANS 1. Capital budgeting
2. Capital structure
3. Working capital management
capital budgeting - ANS What long-term investments or projects should the business take
on?
1 | Page @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED
, capital structure - ANS How should we pay for our assets? Should we use debt or equity?
working capital management - ANS How do we manage the day-to-day finances of the firm?
goal of a firm's financial manager - ANS To maximize the current market value (share price)
of the equity of the firm (whether it's publicly traded or not).
Initial public offerings (IPO)'s are - ANS A primary market transaction.
auction market - ANS NYSE, brokers and agents meet at a physical location (the exchange) to
match buyers and sellers of assets
sole proprietorship advantages - ANS Easiest to start
Least regulated
Single owner keeps all the profits
Taxed once as personal income
sole proprietorship disadvantages - ANS Limited to life of owner
Equity capital limited to owner's personal wealth
Unlimited liability
Difficult to sell ownership interest
partnership advantages - ANS Two or more owners
More capital available
Relatively easy to start
Income taxed once as personal income
partnership disadvantages - ANS Unlimited liability
2 | Page @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED
100% CORRECT ANSWERS | LATEST
VERSION 2025/2026.
4 basic areas of finance - ANS •Corporate finance
•Investments
•Financial institutions
•International finance
Investments - ANS -Works with financial assets such as stocks and bonds
-The Value of financial assets, risk versus return and asset allocation
3 main financial institutions - ANS 1. Banks - commercial and investment, credit unions,
savings and loans
2. Insurance companies
3. Brokerage firms
Financial management decisions - ANS 1. Capital budgeting
2. Capital structure
3. Working capital management
capital budgeting - ANS What long-term investments or projects should the business take
on?
1 | Page @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED
, capital structure - ANS How should we pay for our assets? Should we use debt or equity?
working capital management - ANS How do we manage the day-to-day finances of the firm?
goal of a firm's financial manager - ANS To maximize the current market value (share price)
of the equity of the firm (whether it's publicly traded or not).
Initial public offerings (IPO)'s are - ANS A primary market transaction.
auction market - ANS NYSE, brokers and agents meet at a physical location (the exchange) to
match buyers and sellers of assets
sole proprietorship advantages - ANS Easiest to start
Least regulated
Single owner keeps all the profits
Taxed once as personal income
sole proprietorship disadvantages - ANS Limited to life of owner
Equity capital limited to owner's personal wealth
Unlimited liability
Difficult to sell ownership interest
partnership advantages - ANS Two or more owners
More capital available
Relatively easy to start
Income taxed once as personal income
partnership disadvantages - ANS Unlimited liability
2 | Page @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED
