Podcast
Questions and Answers
What is the primary purpose of investment decisions in finance?
What is the primary purpose of investment decisions in finance?
- To determine how assets will be financed
- To allocate money to maximize its value (correct)
- To diversify away risk
- To reduce or eliminate specific assets
Which principle states that ethical dilemmas are prevalent in finance?
Which principle states that ethical dilemmas are prevalent in finance?
- Principle 8
- Principle 10 (correct)
- Principle 9
- Principle 11
What is the impact of diversification on risk according to Principle 9?
What is the impact of diversification on risk according to Principle 9?
- It increases the difficulty of measuring risk
- It can diversify away some risk (correct)
- It cannot reduce risk
- It can increase risk
What do financing decisions revolve around in finance?
What do financing decisions revolve around in finance?
What are asset management decisions concerned with?
What are asset management decisions concerned with?
What is the primary goal of the firm?
What is the primary goal of the firm?
What is the term for the behavior of principals and their agents in a firm, as mentioned in the text?
What is the term for the behavior of principals and their agents in a firm, as mentioned in the text?
In the context of financial decision-making, what is the best type of financing according to the text?
In the context of financial decision-making, what is the best type of financing according to the text?
What is the main responsibility of management in a modern organization, based on the text?
What is the main responsibility of management in a modern organization, based on the text?
What does Shareholders' wealth encompass?
What does Shareholders' wealth encompass?
Risk can be completely diversified away, leaving no risk at all
Risk can be completely diversified away, leaving no risk at all
According to Principle 10, ethical behavior is subjective and varies from person to person
According to Principle 10, ethical behavior is subjective and varies from person to person
Investment decisions are focused on how to allocate money to maximize its value
Investment decisions are focused on how to allocate money to maximize its value
Financing decisions revolve around how to pay for investments and expenses
Financing decisions revolve around how to pay for investments and expenses
Asset management decisions concern how to finance the assets of a firm
Asset management decisions concern how to finance the assets of a firm
Debt financing always involves risk for the company
Debt financing always involves risk for the company
The modern organization implies a separation between shareholders and management
The modern organization implies a separation between shareholders and management
Social responsibility is a primary focus of agency theory in finance
Social responsibility is a primary focus of agency theory in finance
Maximizing sales or market share is a general goal of the firm
Maximizing sales or market share is a general goal of the firm
The real goal of the firm according to the text is to maximize shareholder wealth
The real goal of the firm according to the text is to maximize shareholder wealth
