Corporate Finance Overview Quiz

The primary market is for initial public offerings (IPOs) and share issues, where companies sell new shares to the public for the first time. The secondary market is where these already issued shares are traded between investors.

In Europe, many companies have a two-tiered board structure. The Supervisory Board oversees and approves the activities of the Executive Board, ensuring shareholder value is protected. This separation provides checks and balances.

In a bankruptcy situation, creditors (including bondholders) are paid first. Then, preferred shareholders get paid, followed by common shareholders. This prioritization protects those who have provided financing.

Strategic alliances are collaborations between companies to achieve shared goals. This can involve sharing resources, expertise, or access to a wider market, helping each company fill gaps in their operations.

Milton Friedman argued that a company's sole responsibility is to maximize shareholder value. He believed that social and environmental issues are the government's role, not businesses'. This is known as the shareholder primacy theory.

A stock split divides existing shares into a higher number of shares, decreasing the price per share but not the total market value. This can make the stock more affordable and increase liquidity.

A stock dividend is a reward given to existing shareholders, usually in the form of more shares, instead of cash. This can increase shareholder value and boost company morale.

A stock buyback is when a company buys back its own shares from the market, reducing the number of outstanding shares, often to increase the share price and improve earnings per share.

A business philosophy that prioritizes profits above all else, even social responsibility. Companies should focus solely on maximizing shareholder value and not engage in activities that don't directly benefit the bottom line.

This approach believes that CSR is a tool for public relations. While it might be part of the company's strategy, it shouldn't be a primary focus. This view prioritizes profits and uses CSR for image management.

Copyright protects original works of authorship, such as artistic performances, music, literature, and software. It gives the creator exclusive rights to copy, distribute, and display their work.

Trademark covers images, logos, brand names, and other distinctive features that identify a specific brand or company. It protects the exclusive right to use these symbols for commercial purposes.

Strategic objectives define long-term goals and direction for the entire organization. They are set by the top management, usually in the executive team or board of directors.

Tactical objectives break down strategic objectives into smaller, actionable plans for specific departments or teams. Middle management usually sets tactical objectives to achieve the overall strategic goal.

Operational objectives are the day-to-day tasks and activities that must be completed to achieve tactical and strategic objectives. Department heads, team leaders, or individual employees usually set these objectives.

Above the Line (ATL) advertising focuses on reaching a mass audience using traditional media, such as television, radio, billboards, and print advertisements. Below the Line (BTL) advertising aims for a smaller, targeted audience using more direct and personalized methods. These methods can include events, promotions, and social media campaigns.

A company acquires another company that operates in the same industry, aiming to increase market share or enter a new market.

A strategic alliance involves two companies collaborating without creating a new entity. A joint venture, however, involves the creation of a new, separate company with shared ownership and responsibility.

A conglomerate is formed when a company diversifies its activities by acquiring businesses in different markets or industries. This helps manage risk by spreading out earnings across multiple areas.

Diseconomies of scale occur when a company's costs rise disproportionately relative to its increased production or services. This can happen due to inefficient management, complexity, or other factors.

In purchasing, economies of scale happen when increased production leads to lower costs per unit. This can be achieved through bulk buying, improved efficiency, and other cost-saving measures.

Knowing the local environment can make business easier due to existing contacts, familiarity with transportation, understanding local regulations, and access to financing.

A zero intermediary distribution channel cuts out middlemen, allowing the company to directly control all aspects of marketing and sales.

A two-intermediary distribution channel can lead to higher prices due to multiple markups and a lack of direct control over marketing efforts.

Business development loans are government-backed loans that require a specific project or action, while grants are free money awarded for similar reasons but don't need repayment.

Advertisements that are simple and attention-grabbing, often using traditional media like television or billboards.

Advertisements that are more artistic and unconventional, often found in niche publications or online platforms.

A committee within a company responsible for overseeing the company's financial reporting and ensuring compliance with regulations.

The market where previously issued securities are traded among investors. It doesn't directly benefit the company issuing the stock.

The market where a company sells its shares to investors for the first time.

Assets that are considered long-term and cannot easily be converted to cash, such as land, buildings, or equipment.

The interest rate on a loan that remains fixed over the life of the loan, regardless of changes in market rates.

The interest rate on a loan that fluctuates with changes in market rates.

Lowering unit cost by spreading production expenses over a larger output, for example, by renegotiating fixed costs or increasing production volume.

People or groups who have an interest in a company's success and are affected by its actions, including investors, employees, customers, suppliers, and the community.

A change in population characteristics, such as age, income, or location, that can affect the demand for a business's products or services. For example, a restaurant might adapt to an influx of new French speakers by offering menus in French.

Growth achieved by expanding a business's own operations, using internal resources, loans, or investments. It's about building from within.

The ability of a company to be profitable even in a variety of conditions, such as changes in consumer demand or economic fluctuations. It's about minimizing risk.

The process of finding the most efficient way to use your resources, including people, equipment, and materials, to produce goods or services. It's about making the most of what you have.

Costs that are directly related to producing a product or service, meaning they change with the level of production. These include the price of materials, labor costs, and shipping expenses.

Costs that remain the same regardless of the volume of production, such as rent, salaries, and insurance. These costs stay the same regardless of how much you make.