Finance Concepts and Perspectives
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Questions and Answers

What are the main elements that affect the values of future cashflows in finance?

  • Real investment, financing, taxation, business structures, advantages
  • Investments, liquidity, working capital, intermediaries, markets
  • Time, money, information, uncertainty/risk, taxation (correct)
  • Government, corporate finance, shareholders, debt capital, gilts
  • Which perspective in finance involves real investment, capital budgeting, and liquidity/working capital management?

  • Government
  • Corporate finance (correct)
  • Investments
  • Financial intermediaries and markets
  • What is a characteristic of a PLC (Public Limited Company) in terms of shareholder liability?

  • Unlimited liability, liable for all company debts
  • Variable liability, dependent on annual profits
  • Shared liability, liable based on ownership percentage
  • Limited liability, the most they can lose is the money they invested (correct)
  • What is a disadvantage of unincorporated business structures like sole traders and partnerships?

    <p>Difficult to sell, ownership and control concentrated</p> Signup and view all the answers

    Which element is characteristic of debt capital in a company's financing?

    <p>Money borrowed for fixed period</p> Signup and view all the answers

    What is the primary purpose of a stock exchange's secondary market?

    <p>To provide correct valuations and fair prices for existing shares</p> Signup and view all the answers

    What is the main advantage of a company issuing new shares in the primary market through an IPO?

    <p>Ability to raise new equity finance for the company</p> Signup and view all the answers

    Why do some investors sell shares in the secondary market based on information motivation?

    <p>Because they believe the company is not performing well currently</p> Signup and view all the answers

    What is a major disadvantage of establishing a corporation in terms of tax implications?

    <p>Double taxation due to corporation taxes and dividends tax</p> Signup and view all the answers

    In the context of financial intermediaries and markets, what is the primary function of money and capital markets?

    <p>To facilitate the exchange of financial securities among investors</p> Signup and view all the answers

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