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FINC 3610 Questions with Detailed Verified Answers
Corporate Finance Ans: ✓ ✓ ✓ a branch of finance that deals with the capital structure and
financial decisions of corporations. encompasses the management of financial resources,
investment decisions, capital budgeting, aiming to maximize shareholder wealth while managing
risks effectively.
three functions of corporate finance Ans: ✓ ✓ ✓ capital budgeting, capital structure, financial
management and policies
Capital Budgeting Ans: ✓ ✓ ✓ the process of planning and managing a firm's long-term
investments. aims to allocate capital in a way that maximizes the value of the firm
Capital Structure Ans: ✓ ✓ ✓ the mix of equity and debt financing a firm uses to fund its
operations and investments. examines the optimal capital structure that balances risk and return to
maximize shareholder value.
financial management and policies Ans: ✓ ✓ ✓ inlcudes managing the company's financial
resources, liquidity management, dividend policies, and working capital management. ensures
efficent use of funds and support the overall financial health of the firm
goal of the firm Ans: ✓ ✓ ✓ maximize shareholder wealth
Sole Proprietorship Ans: ✓ ✓ ✓ A business owned by one person. easy to start and manage.
unlimited personal liability.
General Partnership Ans: ✓ ✓ ✓ A partnership in which all owners share in operating the business
and in assuming liability for the business's debts.
limited partnership Ans: ✓ ✓ ✓ A partnership with one or more general partners (specialized
mngt) have unlimited liability and one or more limited partners.
Corporation Ans: ✓ ✓ ✓ A business owned by stockholders who share in its profits but are not
personally responsible for its debts
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Agency Costs Ans: ✓ ✓ ✓ the costs of the conflict of interest between stockholders and
management
to mitigate agency costs, firms can implement: Ans: ✓ ✓ ✓ corporate goverance, incentivwe
alignment, monitoring and transparency
corporate goverance Ans: ✓ ✓ ✓ the system of governing a company so that the interests of
corporate owners and other stakeholders are protected. examples: independent board of directors,
audit committees
incentive alignment Ans: ✓ ✓ ✓ designing compensation packages that align managerial
incentives with shareholder wealth maximization
example: performance-based bonus
monitoring and transparency Ans: ✓ ✓ ✓ enhancing transparency in financial reporting and
operations, and ensuring regular monitoring of management actions by boards and shareholders
Balance Sheet Ans: ✓ ✓ ✓ A financial statement that provides company's financial position of
assets, liabilities, and stockholder's equity on a specific date.
book values Ans: ✓ ✓ ✓ Value of assets or liabilities according to the balance sheet (historical cost-
-accumulated depreciation) under GAAP
Market Value Ans: ✓ ✓ ✓ values of assests and liabilities based on current market prices/fair
market value (more relevant)
Income Statement Ans: ✓ ✓ ✓ A financial statement that reports a company's revenues and
expenses and resulting net income or net loss for a specific period of time.
income statement formula Ans: ✓ ✓ ✓ total revenue-total expenses
accounting numbers Ans: ✓ ✓ ✓ financial figures reported in company's financial statement based
on accrual accounting principles. includes revenue, expenses, assests, liabilities, equity
cash flows Ans: ✓ ✓ ✓ actual inflows and outflows of cash during a specific period. provides more
direct measurement of a company's liquidity and ability to meet its short-term obligations
Statement of Cash Flows Ans: ✓ ✓ ✓ A financial statement that provides financial information
about the cash receipts and cash payments of a business for a specific period of time. three main
activities: operating, investing, financing.
© Get it right 2025 Getaway - Stuvia US All rights reserved
FINC 3610 Questions with Detailed Verified Answers
Corporate Finance Ans: ✓ ✓ ✓ a branch of finance that deals with the capital structure and
financial decisions of corporations. encompasses the management of financial resources,
investment decisions, capital budgeting, aiming to maximize shareholder wealth while managing
risks effectively.
three functions of corporate finance Ans: ✓ ✓ ✓ capital budgeting, capital structure, financial
management and policies
Capital Budgeting Ans: ✓ ✓ ✓ the process of planning and managing a firm's long-term
investments. aims to allocate capital in a way that maximizes the value of the firm
Capital Structure Ans: ✓ ✓ ✓ the mix of equity and debt financing a firm uses to fund its
operations and investments. examines the optimal capital structure that balances risk and return to
maximize shareholder value.
financial management and policies Ans: ✓ ✓ ✓ inlcudes managing the company's financial
resources, liquidity management, dividend policies, and working capital management. ensures
efficent use of funds and support the overall financial health of the firm
goal of the firm Ans: ✓ ✓ ✓ maximize shareholder wealth
Sole Proprietorship Ans: ✓ ✓ ✓ A business owned by one person. easy to start and manage.
unlimited personal liability.
General Partnership Ans: ✓ ✓ ✓ A partnership in which all owners share in operating the business
and in assuming liability for the business's debts.
limited partnership Ans: ✓ ✓ ✓ A partnership with one or more general partners (specialized
mngt) have unlimited liability and one or more limited partners.
Corporation Ans: ✓ ✓ ✓ A business owned by stockholders who share in its profits but are not
personally responsible for its debts
© Get it right 2025 Getaway - Stuvia US All rights reserved
, Click here for more: Scholars nexus
Agency Costs Ans: ✓ ✓ ✓ the costs of the conflict of interest between stockholders and
management
to mitigate agency costs, firms can implement: Ans: ✓ ✓ ✓ corporate goverance, incentivwe
alignment, monitoring and transparency
corporate goverance Ans: ✓ ✓ ✓ the system of governing a company so that the interests of
corporate owners and other stakeholders are protected. examples: independent board of directors,
audit committees
incentive alignment Ans: ✓ ✓ ✓ designing compensation packages that align managerial
incentives with shareholder wealth maximization
example: performance-based bonus
monitoring and transparency Ans: ✓ ✓ ✓ enhancing transparency in financial reporting and
operations, and ensuring regular monitoring of management actions by boards and shareholders
Balance Sheet Ans: ✓ ✓ ✓ A financial statement that provides company's financial position of
assets, liabilities, and stockholder's equity on a specific date.
book values Ans: ✓ ✓ ✓ Value of assets or liabilities according to the balance sheet (historical cost-
-accumulated depreciation) under GAAP
Market Value Ans: ✓ ✓ ✓ values of assests and liabilities based on current market prices/fair
market value (more relevant)
Income Statement Ans: ✓ ✓ ✓ A financial statement that reports a company's revenues and
expenses and resulting net income or net loss for a specific period of time.
income statement formula Ans: ✓ ✓ ✓ total revenue-total expenses
accounting numbers Ans: ✓ ✓ ✓ financial figures reported in company's financial statement based
on accrual accounting principles. includes revenue, expenses, assests, liabilities, equity
cash flows Ans: ✓ ✓ ✓ actual inflows and outflows of cash during a specific period. provides more
direct measurement of a company's liquidity and ability to meet its short-term obligations
Statement of Cash Flows Ans: ✓ ✓ ✓ A financial statement that provides financial information
about the cash receipts and cash payments of a business for a specific period of time. three main
activities: operating, investing, financing.
© Get it right 2025 Getaway - Stuvia US All rights reserved
