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26 terms

Finance Exam 1-1

STUDY
PLAY
Focuses on the decisions that firms make regarding their operation and cash flows
Managerial Finance
Focuses on the management of money for firms and individuals
Financial Services
Focuses on the decisions made by firms and individuals regarding their portfolios of financial assets
Investments
Focuses on factors that cause interest rates to fluctuate and regulation that market participants face
financial Markets and Institutions
What forms of business organizations have unlimited liability?
Sole Proprietorship and Partnership
What forms of business organizations have limited life?
Sole Proprietorship and Partnership
What forms of business organizations are subject to stiffer government regulations?
Corporation
What forms of business organizations are subject to high income tax rates?
Corporation
What forms of business organizations may have difficulty obtaining large sums of capital?
Sole Proprietorship and Partnership
What should be the primary goal of a corporation?
To maximize the firm's stockholders' wealth
What type of managerial decision consists of how the firm should finance its assets?
Capital Structure
What type of managerial decision would decide about how much of current earnings should be paid out as dividends as opposed to being retained by the firm?
Dividend Policy
What type of managerial decision would decide what types of assets should be purchased to support new projects and generate future cash flows?
Capital Budgeting
What are business ethics?
The company's attitude and conduct toward its stakeholders
What is corporate governance?
The "set of rules" that a firm follows when conducting business
Your friend Rick has a job in which he helps clients manage their money and plan for retirement. Which are of fiance would you say Rick works in?
Financial services
Another friend, Ana, helps her company decide whether to fund new projects with debt or equity capital. Which are of finance would you say that Ana works in?
Managerial finance
Nicholas operated a neighborhood convenience store for many years. When he died, the business was dissolved because there was no plan for control after his death. What type of business is this?
Sole Proprietorship
Trajan is a cosmetics company that is required to periodically file reports with the government and release information to investors. What type of business is this?
Corporation
Together, Bill and Jim own and operate Lawn Enforcement, a lawn service company. A worker suffers an injury and successfully sued the business. The settlement claimed the business's assets, as well as some of Bill and Jim's personal assets. What type of business is this?
Partnership
Hayes Consulting employs over 30 management consultants. Five of the lead consultants own the company together and share in its profits and liabilities. What type of business is this?
Partnership
Henry owned Builders' Place, which managed a chain of hardware stores in Maine. A lawsuit wiped out all of Builders' Place's assets, but Henry's personal assets were never in jeopardy. What type of business is this?
Corporation
What is the primary goal of a corporations management team?
Maximize the price of the firms common stock
Suppose a new law made it more difficult to stage a hostile takeover. What group of an organization would benefit the most?
Management
If a companies stock price is currently greater than its "true" value, is it more or less likely to receive a hostile takeover bid than if its stock price were less than its "true" potential value?
Less Likely
In response to an outbreak of corporate scandals and unethical behavior, what legislation did Congress pass in 2002 to address investor's concerns?
The Sarbanes-Oxley Act