Podcast
Questions and Answers
What subarea of finance involves methods and techniques to make appropriate decisions about what kinds of securities to own?
What subarea of finance involves methods and techniques to make appropriate decisions about what kinds of securities to own?
Investments
Financial management involves decisions about which of the following?
Financial management involves decisions about which of the following?
What subarea of finance is important for adapting to the global economy?
What subarea of finance is important for adapting to the global economy?
International Finance
Who is the firm's highest-level financial manager?
Who is the firm's highest-level financial manager?
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What type of business organization is relatively easy to start and is subject to lighter regulatory burdens?
What type of business organization is relatively easy to start and is subject to lighter regulatory burdens?
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What is generally known as double taxation?
What is generally known as double taxation?
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How can maximizing the value of owner's equity be stated for corporations?
How can maximizing the value of owner's equity be stated for corporations?
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Which of these are NOT basic approaches to minimizing the agency problem?
Which of these are NOT basic approaches to minimizing the agency problem?
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Who helps firms access capital markets and advises managers about interaction with those markets?
Who helps firms access capital markets and advises managers about interaction with those markets?
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The portion of a company's profits that are kept by the company rather than distributed as cash dividends is referred to as _______________.
The portion of a company's profits that are kept by the company rather than distributed as cash dividends is referred to as _______________.
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All of the following are functions of the board of directors except ________.
All of the following are functions of the board of directors except ________.
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Which statement is incorrect regarding shareholder responsibilities?
Which statement is incorrect regarding shareholder responsibilities?
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From a taxation perspective, the form of business organization with the highest business-level taxes is the __________.
From a taxation perspective, the form of business organization with the highest business-level taxes is the __________.
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What do we call the process of earning interest on both the original deposit and earlier interest payments?
What do we call the process of earning interest on both the original deposit and earlier interest payments?
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What is the process called when determining how much a future amount is worth today?
What is the process called when determining how much a future amount is worth today?
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What is the Rule of 72 used for?
What is the Rule of 72 used for?
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A dollar paid in the future is worth as much as a dollar paid today.
A dollar paid in the future is worth as much as a dollar paid today.
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When saving for future expenditures, we can add the ________ of contributions over time to see what the total will be worth at some point.
When saving for future expenditures, we can add the ________ of contributions over time to see what the total will be worth at some point.
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What are level sets of frequent, consistent cash flows called?
What are level sets of frequent, consistent cash flows called?
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What factor, alongside the length of time of the annuity, is important in accumulating wealth within an annuity?
What factor, alongside the length of time of the annuity, is important in accumulating wealth within an annuity?
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The present value of annuity payments made far into the future is worth a lot today.
The present value of annuity payments made far into the future is worth a lot today.
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What type of financial institutions arrange most primary market transactions for businesses in the U.S.?
What type of financial institutions arrange most primary market transactions for businesses in the U.S.?
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What do we refer to first-time stock issues from firms that allow their equity shares to be publicly traded on the stock market?
What do we refer to first-time stock issues from firms that allow their equity shares to be publicly traded on the stock market?
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Once firms issue financial instruments in primary markets, these stocks and bonds are then traded in which of these?
Once firms issue financial instruments in primary markets, these stocks and bonds are then traded in which of these?
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What type of markets feature debt securities or instruments with maturities of one year or less?
What type of markets feature debt securities or instruments with maturities of one year or less?
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Which of the following is NOT a money market instrument?
Which of the following is NOT a money market instrument?
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Which of the following is NOT a capital market instrument?
Which of the following is NOT a capital market instrument?
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Study Notes
Investments
- Involves methods for deciding which securities to own and which firms' securities to purchase.
- Emphasizes how investors prefer to be repaid.
Financial Management
- Encompasses decisions on project funding, minimizing taxation, and determining capital structure.
International Finance
- Crucial for adapting to the dynamics of the global economy.
Chief Financial Officer
- Represents the highest-level financial manager in a firm.
Sole Proprietorship
- A business structure that is easy to establish with minimal regulatory burden compared to other forms.
Double Taxation
- Occurs when corporate income is taxed at both corporate and shareholder levels upon dividend distribution.
Owner's Equity
- Maximizing value equates to maximizing the company’s stock price.
Agency Problem Minimization
- Effective strategies include monitoring management actions and aligning personal interests of managers with owners but ignoring the conflict is not a viable solution.
Investment Bankers
- Assist firms in accessing capital markets and provide advisory services regarding market interactions.
Retained Earnings
- Refers to profits that are reinvested in the company rather than distributed as dividends.
Board of Directors
- Responsible for various functions; however, reporting to auditors is not one of their roles.
Shareholder Bankruptcy Responsibility
- Incorrectly stated that shareholders must pay off corporate bonds in bankruptcy situations.
Business Organization Taxation
- Corporations face the highest level of business taxes from a taxation perspective.
Compounding
- Describes the process of earning interest on both the initial deposit and previously earned interest.
Discounting
- The calculation method used to determine the present worth of a future sum.
Rule of 72
- A mathematical approximation used to estimate the time needed to double an investment.
Future Value
- Represents the total worth of contributions made over time when saving for future expenses.
Annuities
- Defined as level streams of cash flows that occur at regular intervals.
Wealth Accumulation Factors
- The duration of the annuity and the interest rate for compounding are critical for wealth accumulation.
Present Value of Annuities
- Payments scheduled for the far future have very low present value.
Primary Market Transactions
- Investment banks in the U.S. primarily facilitate these transactions for businesses.
Initial Public Offerings
- Refers to first-time stock issues that allow companies to publicly trade equity shares.
Secondary Markets
- In these markets, stocks and bonds already issued in primary markets are traded.
Money Markets
- Comprising debt securities or instruments that mature in one year or less.
Capital Market Instruments
- Notably excludes corporate bonds as money market instruments.
Studying That Suits You
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Description
Prepare for your finance exam with these flashcards covering essential concepts such as investments and financial management decisions. Each card provides a key term along with its definition to help reinforce your understanding. Ideal for students looking to solidify their knowledge in finance.
