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FINC 3610 Exam 1 Questions with Detailed Verified
Answers
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?
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?
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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
•General partnership•Limited partnership
Partnership dissolves when one partner dies or wishes to sell
Difficult to transfer ownership
corporation advantages Ans: ✓ ✓ ✓ Limited liability
Unlimited life
© Get it right 2025 Getaway - Stuvia US All rights reserved
FINC 3610 Exam 1 Questions with Detailed Verified
Answers
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?
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?
© Get it right 2025 Getaway - Stuvia US All rights reserved
, Click here for more: Scholars nexus
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
•General partnership•Limited partnership
Partnership dissolves when one partner dies or wishes to sell
Difficult to transfer ownership
corporation advantages Ans: ✓ ✓ ✓ Limited liability
Unlimited life
© Get it right 2025 Getaway - Stuvia US All rights reserved
