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Questions and Answers
What is the goal of a firm in financial management?
What is the goal of a firm in financial management?
- To increase revenue
- To minimize expenses
- To maximize shareholder wealth (correct)
- To maintain a positive cash flow
What is the study of finance primarily concerned with?
What is the study of finance primarily concerned with?
- Making good decisions involving money (correct)
- Evaluating long-term investments
- Raising capital
- Managing day-to-day operations
What is the area of finance that deals with determining what long-term investments a firm should undertake?
What is the area of finance that deals with determining what long-term investments a firm should undertake?
- Working capital management
- Capital structure decisions
- Raising capital
- Capital budgeting (correct)
What is the area of finance that deals with how a firm should raise money to fund its investments?
What is the area of finance that deals with how a firm should raise money to fund its investments?
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What is the area of finance that deals with managing a firm's day-to-day cash flows?
What is the area of finance that deals with managing a firm's day-to-day cash flows?
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Study Notes
Financial Management Goals
- The primary goal of a firm in financial management is to maximize shareholder wealth.
Study of Finance
- The study of finance is primarily concerned with the allocation and management of money in a business.
Areas of Finance
- Capital Budgeting: Deals with determining what long-term investments a firm should undertake.
- Capital Structure: Deals with how a firm should raise money to fund its investments.
- Working Capital Management: Deals with managing a firm's day-to-day cash flows.
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