Finance Management Overview
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Questions and Answers

What is the primary goal of a firm according to the text?

  • To provide goods and services to the public
  • To maximize the profits of the firm
  • To maximize the wealth of its shareholders (correct)
  • To maximize the wealth of its stakeholders

    • What is the main reason firms exist according to the text?

  • To meet the needs of the local community
  • To provide employment opportunities
  • Because investors are willing to bear the risk (correct)
  • To generate revenue for the government

    • What is the definition of management according to the text?

  • The process of budgeting, saving, and forecasting financial activities
  • The process of raising funds and investing them to earn a profit
  • The process of managing a firm's finances, including investing, borrowing, and lending
  • The process of planning, organizing, directing and controlling activities to meet objectives (correct)

    • What is the definition of finance according to the text?

    <p>The art and science of managing money, including activities like investing, borrowing, lending, budgeting, saving, and forecasting</p> Signup and view all the answers

    What are stakeholders according to the text?

    <p>Individuals who have an economic interest in the firm, but are not owners</p> Signup and view all the answers

    What is the main difference between finance at a personal level and finance in a business context according to the text?

    <p>Personal finance is concerned with individual decisions, while business finance is concerned with firm-level decisions</p> Signup and view all the answers

    What is the main goal of maximizing shareholder wealth according to the text?

    <p>To maximize profitability for the firm's owners</p> Signup and view all the answers

    How are profits commonly measured by corporations?

    <p>By calculating Earnings per Share (EPS)</p> Signup and view all the answers

    What is the primary focus of a firm with a stakeholder approach?

    <p>Preserving stakeholder well-being</p> Signup and view all the answers

    Which violations are associated with Business Ethics according to the text?

    <p>Violation of accounting standards</p> Signup and view all the answers

    What key decisions do Finance Managers make related to investment?

    <p>Decisions on long-term projects to create value for owners</p> Signup and view all the answers

    Which principle guides Finance Managers in considering the relationship between profit and risk?

    <p>Time Value of Money</p> Signup and view all the answers

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